Good morning, ladies and gentlemen, and also a very warm welcome to the participants in the webcast. It's a pleasure to present to you today our full year 2024 results. The presentation is structured as follows: I will start with an overview of 2024, then Tobias will present the sales figures and the operational and financial results. Thereafter, I will talk about the outlook for this year, for the market, and also for Geberit. And then, as usual, we will close with a short summary. So let me start with our key figures 2024. 2024 was a very challenging year for Geberit. The building construction market in Europe sharply declined. However, we managed to achieve very good results. Net sales increased in local currency by 2.5% despite the deteriorating market. A main driver for the sales growth were new product introductions, for example, our new shower toilet Alba.
EBITDA margin reached 29.6%, almost previous year's level, despite significant wage inflation and increased OpEx for various initiatives. EPS increased in local currencies by 1% despite a significant higher tax rate driven by the new OECD minimum taxation. The free cash flow margin reached 19.9%, again a very high level. 88% of free cash flow, or CHF 540 million , were distributed to shareholders via dividend payments and share buybacks. The board of directors proposes a dividend of CHF 12.80 per share, which corresponds to an increase of CHF 0.10 per share. Let me continue our overview with our main activities and achievements in the area of sales and marketing last year. We again invested into our customer relationships and further increased our customer activities. The contact to professional customers increased by 4% last year and reached 468,000 individual contacts.
Customer trainings increased by 19% and customers participating at Geberit events by 13%. We also strengthened our interactions with end consumers. Based on digital B2C marketing initiatives, we generated last year 39,000 digital end consumer leads, a plus of 30% versus previous year. An important marketing format last year were our activities in relation to the 150th anniversary of Geberit. For example, we hosted 71 anniversary events in 38 markets with a total of 8,000 customers and 9,000 employees. In the context of digital marketing tools, we launched last year the new digital WC product finder to simplify the WC selection process, for example, for shower toilets. During the first nine months after the launch, we registered over 69,000 end users. We also launched a project last year to systematically digitize our technical manuals by replacing them with QR codes.
We already replaced technical documentations for 50 products, which resulted not only in cost savings, but also in savings of 175 tons of CO2. 2024 was again an important year for new product introductions. In bathroom systems, we introduced our new shower toilet Alba. Thanks to its entry-level price point of around EUR 1,000, Alba was, in terms of volumes, already in its first year, the best-selling shower toilet of our entire shower toilet portfolio. In piping systems, we further rolled out the SuperTube concept to our existing noise-insulating drainage pipe system, Silent-Pro. The upgraded system saves space, especially mid-rise buildings, thanks to optimized hydraulics. We also introduced the new supply piping system, Mapress Therm, a low alloy stainless steel system for heating and cooling applications.
Finally, we have introduced Geberit Connect, a central communication tool for Geberit products specifically designed for facility managers of public buildings, for example, at airports. Let me now comment on our operations activities. We continued to further improve the productivity of our 26 manufacturing plants. Overall, productivity increased by 3%, driven by further automation, process improvements, and the specialization of our ceramics plant network. Since 2014, productivity has increased in average by 2.8% every year. Let me now comment on some important activities in the area of IT, and I'd like to give you three examples. First, we established last year an internal center of competence for artificial intelligence. A dedicated team of AI experts develops and implements AI use cases in close collaboration with the relevant business functions. Second, we made a major step towards the completion of our OneERP project.
We successfully migrated per end of last year the ERP system of the production site and logistics center in Pfullendorf to the harmonized group system SAP S/4HANA. A last example of important IT investments last year are our increased efforts for cyber defense. We strengthened the IT security team, widened the scope of our cybersecurity activities, and improved our cybersecurity protection and response measures. Let me now comment on our sustainability achievements. After two years of strong reductions, CO2 emissions were slightly up last year, driven by our volume growth. However, in relative terms, CO2 emissions remained stable. With this, we reduced relative CO2 emissions by 63% since 2015 and in absolute terms by 49%. Main drivers for the reduction in CO2 emissions since 2015 were lower energy consumptions, which decreased by 49% versus net sales, and systematically increased sourcing of renewable energy.
Social responsibility is another important pillar of our sustainability strategy. In 2024, we directly employed 255 full-time equivalent positions for employees with disabilities within the Geberit Group. We again consciously sourced products and services in the amount of CHF 9 million from external workshops, which employ disabled or socially disadvantaged people. In total, we support around 600 external and internal disabled socially disadvantaged people, which corresponds to 5.3% of total employees. Finally, let me give you an example of a social project that we conducted in 2024. In Cambodia, we supported the renovation of the sanitary facilities for a local school with 1,800 children. The work has been carried out by Geberit apprentices and was fully financed by Geberit. Our sustainability efforts and focus on our environmental footprint and social responsibility was again also recognized by many rating institutions.
Among others, our commitment and sustainability results were acknowledged by EcoVadis, which ranked us in the top 5% of all rated companies, or by Sustainalytics, which ranked Geberit fifth out of 145 companies in the category of building products. Let me conclude our overview with the development of our number of employees. The number of total FTEs increased moderately by 1.5%. Main drivers were operations due to the increased volumes, sales as a result of our growth initiatives outside Europe, and G&A, particularly in IT, driven by the before-mentioned IT initiatives, including AI and digitalization. With that, I hand over the presentation to Tobias for the sales development.
Thank you, Christian, and good morning, ladies and gentlemen. Net sales in Swiss francs reached CHF 3.09 billion, which is on previous year's level. In local currency, net sales increased by 2.5%. This means we faced again a strong negative effect from weaker currencies versus the Swiss franc, losing CHF 76 million, or 2.5%, due to the unfavorable currency development. Hence, the negative currency effect entirely has offset the net sales decrease in local currencies. The increase of net sales in local currencies came fully from a favorable volume effect of around 2%. In light of the decline of the European building construction industry in 2024, we consider this an impressive result. The volume growth was driven by selective restocking of wholesalers in H1, extraordinarily strong sales with new products such as the Alba shower toilet or the FlowFit piping system, and thirdly, the expansion of our market share.
I start the detailed sales review in local currencies with the region Central Europe. Net sales in Germany increased by 3% despite an ongoing strong market decline. This positive development was driven by strong growth with new products and a strengthened market position. In Switzerland, in an overall soft market environment, we saw good growth, especially with ceramics. Benelux net sales increased by 4%, whereby both Belgium and the Netherlands contributed to the growth. The latter was supported by the start of a recovery in new residential build towards the end of the year. Net sales in Italy were up by 6%. This was the result of a strong growth across product areas despite a weakening market. Net sales in Austria were stable despite an ongoing strong market decline driven by new build. Strong growth with new products has been recorded, leading to a strengthened market position.
Let me now turn to the rest of Europe. Net sales in Western Europe declined by 3%, with a sales decline in France due to a contracting market. Sales grew double-digit in Spain. Overall, in this region, concealed systems showed a good growth. Despite a strong market decline in the entire region, Northern Europe declined by only -4%. Adjusting for the sale of our shower enclosure business as of the end of 2023, net sales would only stand at -2%. We conclude the review of Europe with Eastern Europe. Net sales in Eastern Europe increased by 7%. This was driven by sales growth in almost all countries, also due to a strong base effect from a weak previous year. Also, concealed systems grew double-digit. Outside Europe, we recorded a strong growth of 17% in Middle East Africa.
The strong double-digit result for the fourth year in a row was driven by strong business in the UAE and Saudi Arabia, driven by a double-digit growth of concealed systems and drainage systems. Net sales in Far East Pacific remained stable. Double-digit growth in India and Australia slightly overcompensated weaker result in China due to a declining market. In America, the relevant institutional market was only slightly above previous year. In this environment, Chicago Faucets managed to grow by 3%, driven by growth of its portfolio. Let me now comment on the sales development per product area again in local currencies. Net sales increased across all three product areas. Installation and flushing systems increased by 5%, benefiting from increased concealed system penetration in top penetrated markets and some restocking in H1. Piping systems increased by 1%, negatively affected by a strong decline of the new build sector.
Bathroom systems increased by 1%, negatively affected by the divestment of our Nordic shower business at the end of 2023. I continue with the operational and financial results, starting with the key figures of the past year. Let me though start with a general remark. All P&L results lines were negatively affected by the currency development. However, the impact on margins was limited due to our strong natural hedge. Operational profit was stable, as lower direct material prices and operating leverage compensated currency development, higher wages, and investment in our business through higher OpEx. In numbers, EBITDA decreased by 0.9% in Swiss francs and reached CHF 913 million. In local currencies, EBITDA increased by 2.7%. The EBITDA margin reached 29.6% and, when currency adjusted, previous year's level at 29.9%.
EBIT decreased in Swiss francs as well by 0.9% and reached CHF 762 million, resulting in an EBIT margin of 24.7%. In local currencies, EBIT increased by 3.2%. Net income in Swiss francs decreased by 3.2% to CHF 597 million, mainly driven by a higher tax rate due to the OECD minimum taxation. When adjusted for currency fluctuations, net income stayed stable. EPS was supported by the share buybacks, resulting in a disproportional lower decrease of 1.8%. In local currencies, EPS increased by 1.3%. Free cash flow finally remained high at CHF 613 million, representing a continuously strong free cash flow margin of 19.9%. Let me now review the cost position of the P&L in greater detail. Two major factors favored these. First, lower direct material purchase prices, and second, as mentioned, the currency development. All further comment on these pages are now currency adjusted.
Cost of material decreased by 3.6% despite higher sales volume. Personnel expenses increased by 6.4% due to the strong wage inflation and higher cost of pension plan. Other operating expenses increased by 6.9%, driven by higher marketing expenses and investments, mainly in IT and digitalization. Depreciation was essentially flat, while the amortization of intangible assets increased by 2.5%. At this point, it is worth commenting on the unprecedented cost inflation we have seen over the past few years, especially on direct material cost. After a massive increase by up to 35% versus January 2021 until the end of Q1 2023, direct material prices started to gradually ease thereafter. In 2024, direct material prices were essentially flat. As a result, average direct material prices in 2024 were currently adjusted 5% below prices in 2023.
In the fourth quarter of 2024, average direct material prices were 2% below the fourth quarter of 2023. Overall, direct material prices are still around 21% above pre-war and pre-COVID-19 level. From cost of material, let's now turn to the marketing expenses in Swiss francs. In total, we spent last year CHF 29 million for marketing, which corresponds to 2.9% of net sales. Marketing expenditure were above 2023 due to two reasons. First, the launch of our new Alba shower toilet, and second, the previously mentioned celebration of Geberit's 150-year anniversary. Partially compensating this are FX gains and a further improvement of our marketing efficiency. Examples are the reduction of our print publications and the increased effectiveness of our B2C media spend. I will now comment on R&D expenses. We continue to invest into our innovation pipeline last year.
In total, we have invested CHF 90 million in R&D, or about 2.9% of net sales. Thereof, CHF 74 million are operating expense and CHF 70 million capital expenditure for new products. We have also consistently filed a high number of patents over the last years. In 2024 alone, we have filed 33 patents. This increased number of patents last year was driven by new insulation and flushing technologies, combining competence behind and in front of the wall, what we call across the wall. The full year EBITDA margin bridge on this page highlights the most important factors that impacted the 2024 margin. The positive volume and product mix effect positively influenced our margin by 70 basis points. Again, this positive volume effect was achieved in a declining market.
The net price effect was positive, contributing 160 basis points driven by the softening direct material prices and stable selling prices. Other cost effect had a negative effect of 230 basis points, mainly driven by three factors: wage inflation, higher cost for sales and marketing initiatives, investment in IT and digitalization. The FX effect on the EBITDA margin was very limited at 30 basis points, thanks to our strong natural hedge. In sum, the EBITDA margin stayed stable in 2024 at adjusted currencies. In Swiss franc, we achieved 29.6%, a minor decrease of 30 basis points. I'm now turning to the position below the operating profit. Financial result improved, driven by lower FX losses compared to Fiscal Year 2023. The effective tax rate increased from 16.8% in 2023 to 19.0% in 2024 due to the introduction of the minimum taxation rules in Switzerland, according to OECD's BEPS Pillar 2.
Due to the higher tax rate, net income declined year over year by 3.2%. EPS decreased by 1.8%, comparatively less, supported by our share buyback programs. In local currencies, EPS increased by 1.3%. Turning to the free cash flow. Free cash flow in 2024 decreased by 2% to CHF 613 million. This corresponds to a free cash flow margin of 19.9% and an EBITDA conversion ratio of 67.2%. Net cash flow from operating activities decreased by 1% to CHF 848 million. Paid net capital expenditure decreased by CHF 4 million- CHF 189 million. Interest and other financing costs were slightly higher than 2023, and as a result of the above, free cash flow landed at CHF 613 million. I will now comment on the balance sheet in 2024. Overall, we do not see a significant FX impact on the balance sheet.
Total debt slightly increased to CHF 1.373 million. Net debt remained unchanged, as the cash position increased by CHF 51 million. The balance sheet remained very solid, with an equity ratio of 36% and a net debt to EBITDA ratio of 1.1 times. The increase of net working capital was driven by the volume increase. Finally, the increase in property, plant and equipment was due to the ongoing investments. Let's review our 2024 CapEx in more detail. CapEx reached CHF 182 million. The investment was driven by our continuous efforts to modernize and rationalize, as well as the phase-out of several multi-year investment projects. Overall, 63% of investments were dedicated to modernization and rationalization, 28% to capacity expansion, and 9% to new products. Let me briefly give you a few examples of these investment projects last year.
In our plant in Lichtenstein, Germany, we invested in total EUR 56 million over the course of four years to expand the capacity for installation frames and prefab installation systems. The investment has a payback of 3.3 years. In our plant in Pfullendorf, we invested in total EUR 21 million to expand the building and capacities for filling valves type 383, and the concealed system, and polypropylene WC seats. This investment has a payback of 1.3 years. In Carregado, Portugal, we invested EUR 8 million to build a new tunnel kiln. This kiln strongly increases the efficiency of the ceramics production, reducing CO2 emissions by 3,500 tons CO2 per year. We're now coming to the share buyback programs. In 2024, our share buyback program for 2022 from 2022 ended. In total, we bought back almost 1.3 million shares, amounting to a volume of CHF 600 million .
As part of this program, in 2024, we bought back around 146,000 shares, amounting to CHF 76 million. On September 2nd, we started a new share buyback program with a maximum volume of CHF 300 million. The execution period is a maximum of two years. Since then and until the end of the year, we have bought back around 84,000 shares, amounting to CHF 45 million. Summing both programs, we bought back in 2024 around 230,000 shares, amounting to CHF 121 million. Let's turn to the dividends. For 2024, the Board of Directors proposes a dividend of CHF 12.8 per share, an increase of CHF 0.10 or 0.8%. This is the 14th consecutive year with an increased distribution per share. Since the IPO in 1999, the distribution per share has continuously increased apart from two years, 2001 and 2010.
The payout ratio of 71% of EPS is just above the 50%-70% payout corridor. This proposed dividend means that the distribution per share has increased by 54% since 2014. With the current dividend proposal and the ongoing share buyback, Geberit continues its stable and attractive distribution policy, which has been applied for many years. On this last page, we listed our shareholder distribution of the last five years. Since 2020, Geberit has generated in excess of CHF 3 billion free cash flow. This corresponds to an average free cash flow margin of 21% of net sales. From this accumulated free cash flow, all and even a bit more has been distributed back to shareholders via an attractive mix of dividend payments and share buybacks. In 2024 alone, we distributed over CHF 540 million to shareholders through the dividend and the share buyback programs.
These numbers confirm Geberit's ability to consistently generate stable cash flow over an extended period, even during crises, and our commitment to a shareholder-friendly distribution policy. With this, I hand over to Christian for the outlook.
Thank you, Tobias. Let me start our outlook with our view on the building construction industry this year, which has not materially changed to the outlook which we gave with our first sales information mid of January. I will start with the new build sector in Europe. Building permits in Europe stabilized in the first nine months of last year, with only a slight decrease of -1%. In a few countries, building permits started to recover and grew double-digit last year, namely in the Netherlands, Iberian Peninsula, and Poland. In these countries, building permits were up 17% in the first nine months of last year.
However, in Germany, the Nordic countries, and Austria, building permits decreased still double-digit overall by -12% in the first nine months of last year, however much less negative than in the year before. Driven by our geographical exposure, we therefore expect overall a slightly declining new build sector this year in 2024. Unlike the new build sector, we expect a slightly positive development for the renovation market, which accounts for around 60% of our business. Indicators for renovations started to improve in the course of last year. For example, housing transactions stabilized in the first nine months 2024. New loan volumes for house purchases even started to recover and grew by 6% in the first nine months of last year. We expect, in particular in Germany and the Nordic countries, an improving renovation market in 2025 after two weak years.
Based on the slightly declining new build and the positive renovation market, we expect overall building construction demand to stabilize in Europe in the course of 2025. Outside Europe, we expect a mixed picture for the building construction industry. We expect in several markets, for example, in India or the Gulf region, a strong demand. Other markets, for example, China, will be most probably in a decline, mainly driven by the residential sector. Let me finish our construction market outlook with a trading update for January and February. We had a good start into the year with like-for-like sales up mid-single digit in January and February. Sales were supported by wholesalers' anticipation of sales price increase as of April. Please keep also in mind that Q1 in this year will have one working day less than last year.
On the cost side, we expect direct material prices in H1 2025 to be rather stable on the level of Q4 2024. However, the uncertainties and volatilities of direct material prices have increased due to the increased geopolitical risks and the unpredictable tariff policy of the U.S. Let me now come to the Geberit outlook for this year. I start, as usual, with our new product introductions. We will introduce this year a new installation element called Duofix for WCs, wash places, and bidets. The installation element Duofix is also a core element of our Geberit WC system. That means system plus ceramics. The new metal installation frame provides sanitary installers with multiple benefits. First, an increased flexibility. The new installation element can be utilized for a wider range of installation situations, including a variety of further drywall installations. Second, a simpler and faster installation.
The installation element contains multiple easy handling features that make the work of the sanitary installer even easier. For example, the element can be easily clicked into the footplate. Moreover, the CO2 footprint could be reduced by approximately 10% per element, thanks to less material used. Another important innovation this year is the new fill valve 383 for WC flushing. Its compact design makes the installation, in case of replacement, for the plumber easier and faster. Furthermore, the backward compatibility of 50 years ensures the compatibility with the very, very large installed base in the market. The end consumer benefits from a reduction of filling noise by 30%. This new fill valve also has an improved environmental footprint since less and more recycled material is used. In the area of actuator plates, we upgraded our premium actuator series Sigma 40 with a new slim design.
The thickness of the new plates is only 4 mm, which is three times slimmer than the current actuator plates. End consumers can choose between the premium materials, metal or glass, and from a variety of 20 different colors. In the area of ceramics, we roll out our TurboFlush WC flushing technology to further ceramics series. The TurboFlush technology leads to a 10 times better flushing performance versus what the norm requires and is substantially quieter compared to conventional flushing technologies. With the rollout of TurboFlush to the project series Renova and Selnova, we also strengthen our offer in the project business with attractive functionalities. Also, for the Renova series, we launch a new range of urinals. The new Renova urinal range features an optimized flush with just 0.5 liters of water per flush, an easy-to-clean rimless ceramics, and an easy and fast installation for the installer.
In the area of piping systems, we further roll out our SuperTube system to the Silent-db20 drainage pipe system. Silent-db20 is a highly sound-insulating drainage pipe system. The SuperTube technology allows space-saving as the ventilation pipe can be omitted and smaller pipe diameters due to an optimized drainage performance. The second innovation in piping system is a fixation support if pipes are installed in the concrete of a floor, which is the standard installation in Switzerland. The new fixation support allows the installer to position and fix the pipes before concreting and is applicable to all pipe diameters. This new fixation support is made from 100% recycled materials. Let me continue our Geberit outlook with two important adjustments of our operations footprint, which we have already announced mid-January.
As part of our ceramics specialization strategy, we decided to close our ceramics site in Wesel, Germany, per end of 2026. This will not only improve efficiency, but also improve product quality, product availability, and the sustainability footprint of our ceramics manufacturing network. Total closure and transfer costs are estimated at around EUR 40 million, and we expect annual savings of around EUR 10 million as of 2027. A second major initiative in operations is the establishment of a new additional site for distribution logistics. As part of our long-term capacity planning, but also in the light of risk mitigation, we have decided to build a second distribution center in Ibbenbüren in northern Germany. We will initiate the planning phase for this greenfield project this year and plan to ramp up operations as of 2029 or 2030.
Two other important initiatives this year are dedicated sales activities outside Europe and in the area of IT and digitalization. We will continue to invest into four dedicated sales initiatives in emerging markets, namely in India, Saudi Arabia, Vietnam, and Egypt, by strengthening the respective local sales organizations with additional headcounts and targeting marketing efforts. Secondly, we will further invest into IT and digitalization, specifically into AI initiatives and digital marketing efforts. In total, we will increase our operational expenditures by CHF 20 million this year for these initiatives. Let me finish our outlook with our CapEx plans for 2025. Overall, we plan to invest again around CHF 180 million, driven by several investment projects. Let me give you a few examples. In Pfullendorf, we will complete our new customer training center by end of this year.
This new building provides 5,000 sq m of a capacity to host state-of-the-art training and exhibition formats for our customers. In Pune, in India, we will invest CHF 4 million to localize the production of drainage pipes currently manufactured in our plant in Italy. The payback of this plant expansion is 3.2 years. In Matrei in Austria, our plant for prefabricated products, we will invest EUR 4 million into the insourcing of metal clamps, which are needed for the installation of drainage pipes. We will build a new fully optimized welding and assembly cell for metal clamps with a payback of 3.3 years. In Pfullendorf, Germany, we will invest a total of EUR 9 million to insource the manufacturing of Duroplast seats and lids. The production will be based on highly optimized production cells with a payback of 4.9 years.
Also in Pfullendorf, we will invest another EUR 3 million into a fully optimized production line for our new generation of hinges for toilet seats. The investment has a payback of 2.9 years. And the last example of our investment projects this year is the further automation of specific manufacturing steps in the context of our ceramics specialization strategy. We will invest approximately CHF 4 million in the automation of kiln car loading and logo application in four of our ceramic plants. This investment will increase productivity, but also product quality. Let me close our presentation with a short summary. Despite a very challenging environment with a strong decline of the European building construction markets, we managed to increase our sales and volumes in 2024. This growth was driven by the expansion of our market position and the strong sales development of various new products.
We almost reached the profitability level of the previous year despite strong headwinds from wage inflation and additional operational expenditures for various initiatives. This result was not only supported by lower direct material prices, but also substantially driven by productivity improvements and a strong cost discipline. Despite the very difficult market environment, we stick to our strategy and focused on the execution of various initiatives with the second highest CapEx in Geberit's history. With a free cash flow margin of 20%, we have also proven that we are able to generate very high and industry-leading cash flows even in a contracting market environment and to return the cash flow to shareholders. Let me shortly summarize our outlook for the year. Geopolitical risks and macroeconomic uncertainties have significantly increased.
Despite this uncertain environment, we expect demand in the building construction industry to stabilize in the course of this year after the sharp declines of the last two and a half years. With regards to our two largest P&L cost items, we expect stable direct material prices in H1 and a wage inflation of around 4% for the full year. Regardless of the market environment, our focus this year will be again on various strategic initiatives. For example, the further expansion of our piping business with the newly launched products, Mapress Therm, SuperTube, and FlowFit, or our shower toilet business with a strong focus on the entry-level model Alba, dedicated growth initiatives outside Europe, and the specialization strategy of our ceramic plants to further improve productivity. Geberit remains strongly positioned to further expand its leading market position.
The fundamental success factors for our business remain a clear and stable strategy, a resilient business model, a strong focus on innovation, efficiency and productivity improvements year by year based on continuous investments, a functional and lean organization with a high level of expertise, and finally, a strong and down-to-earth corporate culture that suits our customers and is lived by a motivated organization. These factors form the basis for further value creation for our customers, our employees, and our shareholders. With this, we are at the end of our presentation. Here you have, as usual, your important financial dates, and we are now ready to answer your questions. If I may sit down for a second. Mr. Fehlenbach.
Could you give us some insight about your thoughts concerning the wage, the tax discussions, tariff discussions globally, and how and where Geberit could be influenced, affected? Thanks.
Tax? Yeah.
Tax rate, I mean, it's been fully implemented last year, so it depends a bit on where the threshold will change, but for now, it's really Switzerland. There's always more countries which are in the scope, but so far, and as guided before, we still expect the roughly 19%-20% tax rate going forward.
Was a misunderstanding that the tariff discussions are global or within Switzerland? With both misunderstandings.
The tariffs, tariffs, we do not expect any significant impact at that stage, but I've already answered the tax question with that. And on the tariffs, no major impact. We source mostly locally, and therefore that is minor at that stage. Mr. Ros enau.
Yeah, thank you, Remo Rosenau, Helvetische Bank. I think in the conference call in January, you said that you will implement again a price increase in April as usual.
Could you confirm that in the range of 1%-1.5%?
In the range of 1%, the usual price increase, which we used to do before this whole inflation started. So a regular price increase, and we have started to implement that as of April.
Okay. Then you elaborated on the material costs, more or less flat, personnel, 4% inflation. What about energy? I mean, energy costs should help a little bit in 2025, right? Yeah.
In overall, energy is not that relevant. Last year, it made below 2% of net sales, so it's not that big and extremely difficult to predict.
Okay. Then you mentioned that Alba is now already the best-selling product in the shower toilet area. Did it cannibalize the others? Did the others go down?
It's a very interesting observation.
A little bit in the mid-segment, so the Sela, it was slightly down, but Mera was even growing. So what we have heard and also believe that Alba also stimulates to a certain extent the category and even helps the upper segment. So there's a slight cannibalization even below our expectations in the mid-level. The premium didn't grow.
Okay. So overall, all categories together do grow very healthy?
wIn volumes, very, very, very healthy. And more importantly, obviously, also in value, we have been growing double-digit in value with the entire shower toilet portfolio last year. And we had a record sales, obviously, in terms of volumes, the highest number ever since 1980, I think, when we started to do shower toilets.
Okay. And in terms of capacities, I mean, how much more Alba can you produce with your current setup?
Thank you for the question because Alba's sales was above expectations last year, and one of the achievements was not only the sales organization selling it, it was also a big achievement of operations to supply them, and we didn't have any supply issues, and also for this year, I think we are very well prepared for a strong growth, so we are confident that we will not have any supply constraints also this year for Alba.
That means positive operating leverage?
Yes, yes.
Okay.
In that segment, obviously, yeah. We're not giving a guidance overall on the entire volume, but indeed in shower toilet, yes.
Thank you. John Revill.
Yeah. Oh, good. John Revill, Reuters. A couple of points, if I may.
I was wondering, with Germany announcing this EUR 500 billion infrastructure fund coming up, how do you see that affecting construction and how do you see that affecting Geberit in your biggest market? That's the first question. The second one is, in a generally inflationary environment that we're probably going to see, it looks like central banks are going to, obviously, interest rates, I mean, you've mentioned this yourselves, interest rates could stay higher for longer. So how much of that is a negative factor, do you think, moving forward? And then finally, you say, obviously, you're not affected by tariffs directly, but how much of a kind of headache, or is it just the constant kind of uncertainty that we seem to be kind of heading into currently? How much of it, kind of management time, people just, they're things changing from day to day?
Is it for you guys, basically? Thank you.
I will answer number one and three and take over number two. So the German program, the EUR 500 billion, which has been announced yesterday or the day before in the evening, I think there are two elements of that having an impact on our business. We generate in Germany around 5%-8% of our sales with public buildings, so for hospitals, schools, which most probably are positively affected, if we understood correctly the program from this EUR 500 billion. So that's a positive, but maybe it's not the major driver. I think the second one is more important. I think it gives a positive sentiment into the market and the general economy, I assume, will benefit from that, which then also positive for us, obviously, because, as you know, the sentiment, consumer confidence is not at a very high level in Germany.
If that goes up with that program, I think that will be the more important lever for us than just direct exposure to certain elements. Question number two.
It's actually exactly the same answer. Obviously, high interest rate, if they were to materialize, would have an effect on us, but I think especially in Europe, the sentiment is more relevant. So with Germany turning positive, etc., with mortgages not being fixed for 30 years like in the U.S., I think, yes, it has an impact, but sentiment prevails.
Question number three, if I understood correctly, overall, the headaches of all these tariff policies and daily changing announcements doesn't give us a lot of headache at Geberit, to be honest. We are very much in Europe. We have very local supply chains. On a top management level, relatively limited.
Of course, for the purchasing department, there's much more volatility. Prices are changing faster, up and down, but on a top level of the company, due to our geographic exposure, it's not a big headache. Yeah.
Christian Arnold from ODDO Some questions on the products. You mentioned when you were talking about the outperformance in 2024 that one major driver was the, and I quote, "extraordinary volume growth" in FlowFit and Alba. Would you expect this extraordinary growth to continue also in 2025?
Yes.
Clear.
Second question. I also saw that you mentioned several times concealed cistern as a growth driver. So, for example, in Western Europe, is that now the kind of break into Spain, which is more of a ceramic market, and you are now actually in the position to actually increase your position in Spain as well?
Not particularly only Spain.
In Spain as well, but on a very low level, to be fair. In terms of relevance, it's more in France. In France, we are progressing nicely with concealed cistern, although the market in France is not that easy, or was not that easy last year. But in terms of concealed cistern, we have been growing nicely, not only last year, the last couple of years. In France, it's specifically linked also to some initiatives which are related to a little bit different channel, which is the DIY channel. You might remember it's an important part in France. We started 2017 to introduce bundles, boxes for the DIY specifically, so where you buy a concealed system with the ceramics, and that is growing very strongly, and by the way, also with nice margins in the DIY channel.
Okay.
France is also, so to say, more geared towards ceramics so far, and now moving more and more behind the wall, one could say so?
That's the first innovation.
Yep. Okay. And the third question would be actually on a product you are launching this year, the Duofix. If I'm not mistaken, Duofix is a very, very important product for you. So could that be the next kind of blockbuster, so to say, after the products you launched in recent years?
I think the difference is Duofix is already a blockbuster. That's the main difference. So I think we are strengthening a blockbuster to become, hopefully, even a more blockbuster to that extent. Of course, you will see that afterwards, for you who are in the room, you have the opportunity to see it after its life, what are the advantages.
There are many, many little things of a very core product which we are improving. Of course, we hope that it will be better accepted, even better, but it will not be a step change like what we have seen, for example, with FlowFit or with Alba. I think from that point of view, it's different.
Okay. Thank you.
Maybe on the record, sorry, I always forget.
I have several questions. First one is from Axel Stasse from Morgan Stanley. If we assume wages represent 25% of group and expect wage inflation of 4%, it leads us to a +1% price increase needed in 2025. However, you expect further costs in 2025, like OpEx, CHF 20 million, and should expect inflation on other cost items which cannot be offset with price increases. What is the likelihood of further pricing hikes announced by Geberit in 2025?
How would a pricing hike be accepted by distributors?
So, as usual, let me start with the general comment. We're not making a guidance on EBITDA at that stage. The second answer, the second question is whether we expect further price increases at that stage. No, we do not. Things might change. You never know depending on what happens in the world, but currently, no. Third point, which was not mentioned by Axel, was obviously there's also a potential positive volume operating leverage that would contribute to the margin.
Okay. So some questions from Daniela Costa, two already answered. The third one, what is the level of wholesaler inventories at the moment versus past references?
So it is still kind of below normal. However, we assume that it's slightly increased. I mentioned briefly before that we have had a good start in January and February.
That was triggered by the sales price increase which we implemented as of April, which we didn't do last year, you might remember. So that has obviously increased at the moment stock levels like it usually did when we increase price levels.
Okay. So then two questions from Pujarini Ghosh from Bernstein. Since you gave your EBITDA guidance for the mid-term of 28%-30%, over the last two years, you came in close to the upper end under very challenging market conditions. What is preventing you from rising that guidance? In other words, what risk do you see over the next few years which would prevent you from beating the top end of your guidance?
So overall, we feel very confident still with the 28%-30%, and at that stage, we do not plan to change that. We see plenty of investment opportunities as well.
So if we were in a position where we would be constantly close or above that, we see potential to further increase our investments.
Okay. Thank you. And the second one from her. Please, could you give us some more details on the increase in personnel costs breakdown into wage inflation and higher pension costs? How do we expect wage inflation to evolve in the coming quarters and years?
So the first part of the question, I believe, is for last year. We do not give an exact split, but the wage inflation was around 5% last year. So that gives some hints. And going forward, we have a 4% wage inflation that is planned, ranging from lows in just above 1% in Switzerland to 6%-7% in Poland, with Germany pretty much on the average.
Okay. Thank you. And the next question from Harry Goad from Redburn Atlantic.
Do you have an idea of how much of the growth in January and February was due to wholesaler stocking, like you mentioned, versus underlying growth? Could you also give some colors on the growth in January and February in terms of where this came from, e.g., Europe versus outside Europe?
The second part, geographically, was across the board. There were not specific regions which stood out. And the second question, as usual, we can't exactly quantify, but it was clear that that was driven by the fact that we increased prices, but we can't quantify. We don't know.
Okay. And then the last question from Pierre Rousseau from Barclays. Could you comment on the growth from your initiatives in the Middle East and Asia where you above this 20% CAGR, you targeted mid-term?
These four mentioned four countries where we have already started last year to have on top initiatives. It's not that we do nothing in the rest outside Europe, but on top initiatives, basically sales and marketing efforts, we expect that just these four countries contribute around one third of the growth expectations outside Europe. You had a question?
Thanks. Martin Flückiger from Kepler Cheuvreux. Two questions, please. Firstly, could you give us an update on how or what kind of feedback you're getting regarding showroom visits in Europe and particularly in Germany? That would be my first question. And then secondly, regarding that incremental CHF 20 million for the growth initiatives outside of Europe, is there a particular ramp-up expected, or are these spread out across the four quarters pretty evenly?
In terms of showroom visits, we have particularly heard in Switzerland that that has started to pick up already in the second half of last year. In Germany, it's a bit mixed picture still, but I would assume, looking at what we said in our introduction and some of these renovation indicators, which are quite positive, the transactions which are up, also the loan volumes, that also that might increase, should be rather positive. But I haven't got very specific feedback on that. In Switzerland, we got it very specifically.
And on the CHF 20 million, it's relatively even distributed, but the sale is slight ramp-up, obviously, because part of that is hiring, which was decided in the budget, and therefore that takes some time, but it's not totally back-end loaded. Not totally. Not totally. It's relatively even, but there's a slight trend nevertheless. Thanks.
Nathalie Olof-Ors from the Agence France-Presse.
America represents 3% of your sales. How much of this is done in the U.S., and do you sell in other markets on the American continent? And I see in your report that you have two factories in the U.S. I assume it's supplying the market locally, but do you have components that go across borders and could be affected by the tariffs? And do you sell, for instance, in Canada or Mexico? And for these markets, where are your products manufactured?
So I start with the sales footprint of this 3%. The majority is in the U.S. There's a little bit into Canada, there's a little bit into Mexico, but the majority is U.S. And from a sourcing perspective, also the majority is manufactured locally in these two plants that you mentioned, and a smaller part is imported.
Basically, it's the concealed system which we are selling in the U.S. They're imported from plants in Europe. But as Tobias said before, if you look how much we are sourcing cross-border, for example, intercompany from Europe or also some little components from Asia, it's relatively minor. So whatever happens with the tariffs, even if there would be a tariff for European products imported into the U.S., would not have a material impact on the Geberit Group, just due to small size.
For the Canadian market, for instance, where do you manufacture your products?
That's what I managed. Either it's going through, if it's a concealed system in Canada, which you would see, Geberit, then it will go from Europe to our U.S. business, and they sell it into Canada. But it's really, unfortunately, very small. You don't see very often Geberit in Canada.
Yeah, I have a question on your AI push. Can you elaborate a bit on what you are focusing there? Is it more like processes, or is it end consumers? What do you expect from your new team that you hired?
The strategy has three pillars in AI. Number one is we want, first of all, to enable the organization to use AI in many use cases which you are aware of as well, just using AI internally. Number two is to work and to develop specific use cases which are mainly focusing on the marketing sales area, but also in other areas, operations, but main focus is marketing and sales. And that's leading to the third pillar. If you want to do that, we need to enable the systems, especially the data, to be ready for AI.
So the fundamental, these are the three strategic pillars of this AI initiative, which we have built now relatively fast, which is starting in September with a team of five people in-house. Obviously, the core then we have supporters from IT and so on to be fast in that technology, because normally, if you allow me this remark, as you know, our industry is relatively slow-moving. It's not very disruptive. We are not always the first in many things. Here we have a different view. We believe we need to be fast in terms of AI, because this has nothing to do with slow-moving toilet markets. Yeah, Roman?
Two questions from Tobias Woerner, Stifel. It seems that Google searches for bathrooms have broken out again since Q4 2024. What do you think drives this?
Obviously, customers searching for sanitary products. It makes me happy, first of all.
I didn't know that, but it might be a sign coming back a little bit to your question, Mr. Flückiger. It might be a sign that in certain markets, we have seen the bottom. They're starting to flower to start to grow again, and maybe that also triggers then, obviously, online certain searches. We have seen that already. You might remember at the beginning of Corona, when the whole home improvement boom started, it was quite clearly visible then that these searches in the sanitary field started to grow very fast, so I think it's consistent with that we expect the stabilization of the market, in some markets, even a growth again this year after two and a half very difficult or declining years.
And the second question, which goes in the same direction, when you look to official sales at German wholesalers of sanitary ware, you seem to have gained market share. Is that a fair reflection, and do you think that your like-for-like sales growth reflects these market share gains?
I think this is a very fair observation. We also believe and agree that we have gained market share in Germany last year. I would even add the word significant market share last year.
And then the next question from Jon Bell, Deutsche Bank. January and February sales strong ahead of a price rise. Did these sales come in ahead of your own internal budgets?
No, we expected that it will be good because of the price increase, but honestly, monthly budget on that level, sometimes it's good, sometimes it's bad. But you did a good job with the budget, obviously.
Appreciate the compliment. Thank you so much, Christian. And on that, Mr. Arnold?
Just on the same subject, maybe clarification. You were saying in January and February this mid-single digit growth, but we're also saying one day less. This one day less, is that January-February and the mid-single digit growth, is that like-for-like?
The mid-single digit growth is like-for-like, not taking into account working day effects. The one day less was referring to the first quarter. For the first quarter. Because you have in January and February, one day less each and March one more, but overall for the first quarter, it's one working day less. And the mid-single digit growth of like-for-like without working day effects. And currencies anyway in January and February. Thanks.
I have a question on the financial situation of your clients, though in all distribution areas, given the fact that especially in Germany, quite difficult market situation. So do you see increased risk to collect money?
At that stage, no. In any way, we're not selling. That's an obvious statement here, but we're not selling to really the plumbers, the installers, but to wholesalers, which are a relatively large group, especially in Germany. On top of that, we also have credit insurances, so we haven't seen any defaults, and we're also not expecting any major going forward.
Hi, Ingo Stoehr from UBS. You have a relatively even bond maturity schedule. Can we expect you'll probably refinance your bond maturity this year? That's the first question. Then you have a large euro footprint. Is there a reason why you might not finance also in euro?
Is it all in Swiss francs right now?
Yeah. So yes, we plan to refinance, all things being equal. We do not need to. We have enough credit facilities to do without, but normally we do refinance bonds as they become due. Then on euro versus Swiss franc refinancing, we do look at that on a regular basis. However, considering the interest differential, it is not attractive to finance in euros at that stage.
And follow-up, your leverage has kind of gone up a little bit. Do you kind of have a target where you would like to stay below?
We said that around 1.5 times net debt to EBITDA is what we think is adequate for that business. Currently, we stand at 1.1.
Thank you. I'm not sure if I missed that this CHF 40 million costs for the closing of Wesel. How is it split into 2024 and 2025?
Will there be more costs or is everything booked already? And the second question, if you'll allow, your general outlook of overall stabilization of building construction in Europe. I mean, is it correct that this refers especially also to a new building sector?
I think maybe the first one, first of all, nothing of that has been booked last year in 2024, so it all will be booked to a large part, the restructuring part, in 2025. Some parts, especially also the depreciation part, which is CHF 15 million of the CHF 40 million, might also be booked then later on in 2026.
For the new build, we still believe that build is likely declining in Europe this year because you have still some markets where building permits have been down last year, especially in our geographies, but compensated by a positive environment in renovation. No, nothing online. Any other questions?
So I think this is it. Thank you very much for the webcast for participating. For the people in the room, we have a little goodie as usual. We brought the new products with us. So one is the Duofix, which you will have the chance to see afterwards, the blockbuster. And the second is the new actuator plates, which we combined in a tour with the installation of the toilet. And we would do a short presentation. We would divide the room, 10 minutes each, and then we would switch groups. And after the 20 minutes, we will give you also a coffee and something to eat. So if I may propose that just maybe the first people on that side still go to that side, and after number two, please start on the right-hand side in the corner. Thank you so much.