Good morning, ladies and gentlemen, and welcome to our analysts and media conference. The presentation is structured as follows. As usual, first, I will provide you with an overview of 2025 and present the sales development last year. Afterwards, Tobias will present the operational and financial results of 2025. Thereafter, I will talk about the outlook of this year and summarize our presentation. As usual, at the end of the presentation, you have the opportunity to ask questions. Let me start with our key figures, 2025. After the significant decline of the European building construction industry since mid-2022, the market stabilized last year. In this flat market environment, we increased net sales by 4.8% in local currencies, almost entirely driven by volume growth.
The EBITDA margin reached 29.4%, a slight decline versus 2024, caused by the one-time effect of the Wesel plant closure. Excluding these plant closure costs, the EBITDA margin had reached 30.0%, an improvement of 40 basis points compared to previous year. EPS increased by 8.4%, 5% in local currencies and excluding the plant closure costs. Our strong operating results are also reflected in the industry-leading free cash flow margin of 20.8%. Simultaneously, we achieved strong results in the area of sustainability. We reduced the relative CO2 emissions by 6.9%. Finally, the board of directors proposes a dividend of CHF 12.90 per share, which corresponds to an increase of 0.10 CHF per share.
Let me continue with the overview of our main activities and achievements in sales and marketing last year. We again invested in our customer relationships and further increased our customer activities. Professional customer contacts increased by 2% and reached 478,000 individual contacts. Customer trainings increased by 16%, and customers participating in Geberit events even by 48%, driven by the introduction of the new installation element Duofix 4. At the same time, we also strengthened our interactions with end consumers. Based on several B2C marketing activities, we generated 114,000 new end consumer leads, an increase of 34% versus previous year. Let me give you a few examples of other important sales and marketing activities last year. We launched the new brand and marketing concept, Mastering Water, to demonstrate Geberit's core competence in guiding, controlling, and using water inside buildings.
This new brand and marketing concept was used for the first time at our new booth at the leading industry fair called ISH to present our entire product portfolio, including interactive displays and hands-on areas. We welcomed a record number of 50,000 professional visitors at our booth at ISH. A third example is the extension of our digital WC product finder with Washplace products. In 2025, over 280,000 end consumers used the tool to navigate through our Bathroom Systems product portfolio. 2025 was again marked by important product introductions. The highlight last year was the introduction of our new installation element, Duofix 4. It consists of a new frame with numerous new features, which make the installation for sanitary plumbers easier and faster. Also, in the product area of Installation and Flushing Systems, we introduced the new Sigma40 actuator plates.
With a thickness of just 4 mm, the new plates are three times slimmer than their predecessors to address modern and slim design requirements. In Piping Systems, we further rolled out our SuperTube concept to our existing noise- insulating drainage system, Silent-db20. The upgraded system reduces noise and saves space in mid- and high-rise buildings, thanks to optimized hydraulics. Finally, in Bathroom Systems, we further rolled out the toilet flushing technology called TurboFlush to the mid- and basic segment to enter the project business with best-in-class flushing technology. Let me now comment on our operations last year. We continued to improve the productivity of our 26 manufacturing plants. Overall, and supported by volume growth, we increased productivity by 4.1% in 2025, driven by further automation, process improvements, and the specialization of our ceramics manufacturing network.
Since 2014, we have increased production productivity on average by 3% per year. Let me now comment on our sustainability achievements last year. We reduced absolute CO2 emissions by 2.4% and relative CO2 emissions even by 6.9%. The main driver for this strong environmental performance were efficiency gains in ceramics manufacturing. Since 2015, we reduced relative CO2 emissions by 69% and absolute CO2 emissions by 55%, which we think is a very strong result. Main drivers of this significant reduction in CO2 emissions were process improvements leading to lower energy consumption, investments in energy efficient ceramic firing kilns, and systematically increased sourcing of renewable energy. Social responsibility is another important pillar of our sustainability strategy. In 2025, we directly employed 291 full-time equivalents with disabilities.
We consciously sourced products and services in the amount of CHF 10 million from external workshops, which employ disabled or socially disadvantaged people. In total, we support around 740 disabled or socially disadvantaged people, which corresponds to approximately 6.5% of all employees. Finally, let me again give you an example of a social project that we conducted last year. In Kenya, we renovated and equipped the sanitary facilities of a local girls school with 1,200 students. The work was carried out by Geberit apprentices and was fully financed by Geberit. Our sustainability efforts and focus on our environmental footprint and social responsibility were again recognized by many rating institutions. Among others, our commitment and sustainability results were acknowledged by Sustainalytics, ranking Geberit 4th out of 135 companies in the building product sector.
EcoVadis, which ranked us in the top 6% of all rated companies, and MSCI, which awarded us an AA ESG rating. Let me conclude our overview with the results of the company-wide employee survey last year, a survey which we conduct every four years. Across all survey dimensions, survey results improved versus 2021 and exceeded the industry benchmark. The overall results are a testament to the high satisfaction level and commitment of our employees. The best results were achieved in the dimensions corporate social responsibility, innovation, clear and promising direction, and development opportunities. After this overview, I continue now with the review of our sales development last year. Net sales in Swiss francs reached CHF 3.16 billion, an increase of 2.5% versus previous year. In local currencies, net sales grew by 4.8%.
This means we faced a negative currency effect of CHF 72 million or -2.3%. The increase of net sales in local currencies was almost fully driven by volumes. In light of the flat European building construction market in 2025, we consider this as a strong result. The main reasons for this market outperformance were our undiminished market presence and sales efforts since mid-2022, when the European building construction industry started to collapse. Second, strong sales with newly introduced products. Third, the success of dedicated sales initiatives and investments outside Europe. 25% of total growth last year was driven by markets outside Europe. Let me briefly comment on the quarterly sales development last year, which was influenced by two major factors.
First, sales volatility in the first three quarters was mainly driven by the introduction of the new Duofix 4 installation system, which was rolled out in several waves. Second, Q4 was positively influenced by disproportional purchases from wholesalers in December to achieve better bonus levels. Let me now discuss the sales development in more detail on regional level. I start with Central Europe. In Germany, net sales increased by 6% with double-digit growth in Bathroom Systems, despite a still slightly declining market, driven by a still weak new build sector last year. In Switzerland, net sales grew by 1%, negatively affected by selected FX-related price adjustments. Net sales in the Benelux region increased by 7%, driven by growth in both countries, Belgium and the Netherlands. In Italy, net sales were up by 2% despite a softening market with strong growth of new products.
In Austria, we also benefited from strong growth with new products and a market stabilization after two years of a strong decline. Let me now turn to the rest of Europe. Net sales in Western Europe achieved previous year's level. Sales growth in Iberia and the UK was compensated by the market-driven sales decline in France. The market in Northern Europe stabilized after a strong decline over the last two years. Net sales grew by 3% with growth in all Nordic markets. Net sales in Eastern Europe increased by 4%, driven by sales growth in almost all countries, which was particularly strong in the Adriatic region. This brings me to the markets outside Europe, which account for only 11% of sales, but contributed 25% to growth last year. Outside Europe, we recorded strong growth of 25% in the Middle East Africa region.
This is the 5th year in a row in which we have achieved double-digit growth in this region. Net sales in Far East Pacific declined slightly by -1%. Strong growth in India was almost fully offset by the sales decline in China due to the ongoing real estate crisis. In America, net sales grew by 4%. The Chicago Faucets portfolio delivered strong growth without major effects from tariffs. Let me now comment on the sales development per product area, again in local currencies. Net sales increased across all three product areas, both in Swiss franc and local currencies. Installation of flushing systems increased by 5% with double-digit growth outside Europe, driven by the ongoing penetration of concealed cistern technology. Piping systems increased by 3%, negatively affected by its higher exposure to the still declining new build market last year.
Bathroom Systems increased by 6%, benefiting from strong growth with our shower toilet business. For the operational and financial results, I will now hand over to Tobias.
Thank you, Christian. I will start with a general remark. All P&L result lines were significantly negatively affected by the currency development. Nevertheless, all lines of the P&L showed an improvement year on year. Also, the impact on margin was limited due to our strong natural hedge. Excluding the negative effect of our plant closure in Wesel, our EBITDA and EBIT margins improved. In numbers, EBITDA increased by 2% in Swiss francs and reached CHF 931 million. In local currencies, EBITDA increased by 5.3%. The EBITDA margin reached 29.4%. Excluding the negative margin impact of the Wesel closure of 60 basis points, the EBITDA margin would have reached 30.0% and exceeded 2024 levels.
EBIT increased in Swiss francs by 0.7% and reached CHF 767 million, resulting in an EBIT margin of 24.3%. In local currencies, EBIT increased by 4.3%. Excluding the negative margin impact of the plant closure of 70 basis points, the EBIT margin would have exceeded 2024 levels. Net income in Swiss francs remained stable at CHF 598 million, but increased in local currencies by 4.8%. EPS was supported by the share buyback program, resulting in a disproportionately high increase of 0.5%. In local currencies and excluding the plant closure cost, EPS increased by 8.5%.
Free cash flow increased by 7.4% to CHF 659 million, resulting in an increase of the free cash flow margin to 20.8%. Our industry leading return on invested capital increased slightly and reached 23.2%. I would like to give you now some more details on the negative currency effect of CHF 72 million or 2.3% on the top line last year, as mentioned by Christian. The euro and currencies in Northern Europe, which together account for 70% of our net sales, only contributed 48% of the overall top line FX effect. Most of the negative currency effect was driven by a basket of small currencies and the U.S. Dollar, which significantly weakened against the Swiss franc last year.
Although these currencies only account for 20% of our net sales basket, they were accountable for 52% of the negative currency effect. Let's now review the cost position of the P&L in greater detail. Two major factors favored these. First, the currency development. Second, lower direct material purchase prices. The following comments are all currency adjusted. Cost of material increased by 1.5%. We will come back to this position on the next page. Personnel expenses increased by 7.8% due to one-time costs related to the plant closure in Wesel, as well as wage inflation of 3.8%.
Other operating expenses increased by 5.0%, driven notably by higher energy prices and investment in IT and digitalization. Depreciation increased by 12.8%, impacted by the plant closure in Wesel, while the amortization of intangible assets decreased by 8%. The low cost of materials increase of 1.5% seen on the previous slide was supported by tailwind from lower direct material prices. In 2025, there were currency-adjusted around -2% below those of 2024. In the fourth quarter of 2025, average direct material prices were flat versus the third quarter of 2025 and -2% below the fourth quarter of 2024. The personnel cost increase was only slightly driven by the number of total FTEs, which increased by merely 1.5%.
The main areas of increase were operations, due to the increased volumes, and sales, driven by growth initiatives outside Europe and by selectively strengthening expertise in Europe. From personnel costs, let's now turn to the marketing expenses in Swiss francs. In total, we spent CHF 88 million for marketing last year, which corresponds to 2.8% of net sales, roughly equivalent to the previous years. The slight decline in Swiss franc versus 2024 can almost fully be attributed to the strengthening of the Swiss franc. I will now comment on R&D expenditure and investments. We continued to invest in our innovation pipeline last year. In total, we invested CHF 86 million in R&D, both as OpEx and CapEx. This represents 2.7% of net sales and is in line with previous years as well.
As a result of our R&D efforts, we have filed 18 patents for upcoming product innovations. The full year EBITDA margin bridge on this page highlights the most important factors that impacted the 2025 margin. The positive volume and product mix effect positively influenced our margins by 130 basis points. It was driven by the positive operating leverage effect and efficiency gains. The net price effect was positive, contributing to 40 basis points due to lower direct material prices. Other cost effect had a negative effect of 110 basis points, mainly driven by three factors, wage inflation, higher energy prices, and investment in growth initiatives, IT, and digitalization. The FX effect of 20 basis points on the EBITDA margin was very limited thanks to our strong natural hedge.
Finally, the one-time costs related to the Wesel plant closure led to a -60 basis point decrease. In sum, this results in a slight margin decrease of -20 basis points. Excluding plant closures, the EBITDA margin would have increased by 40 basis points. I'm now turning to the positions below the operating profit. Financial result decreased to -CHF 33 million due to FX losses. The effective tax rate decreased slightly from 19% in 2024 to 18.6% in 2025. Excluding the plant closure costs and in local currencies, we achieved a net income increase of 8.1% and an EPS increase of 8.5%. The more favorable EPS development versus net income can be attributed to our continued share buyback program. Turning to the free cash flow.
This one increased by 7.4% to CHF 659 million, thanks to our strong operational performance and lower capital expenditures. This corresponds to a free cash flow margin of 20.8% and an EBITDA conversion ratio of 70.8%. Net cash flow from operating activities increased by 2.3% to CHF 867 million. Paid net capital expenditure decreased by CHF 30 million to CHF 159 million. Interest and other financing costs were almost stable compared to 2024. I will now comment on our balance sheet at the end of 2025. Net debt decreased by CHF 196 million, mainly driven by the higher cash position.
As a result, both our equity ratio and net debt to EBITDA ratio improved to 39% and 0.8x , respectively. The net working capital decrease was driven by timing of VAT payments. Finally, the increase in property, plant, and equipment was due to continued strategic investments. Let's review our 2025 CapEx in more detail. CapEx reached CHF 173 million, or 5.5% of net sales. The investments were driven by our continuous efforts to modernize and rationalize, as well as the phase- out of several multi-year investment projects. Overall, 60% of investments were dedicated to modernization and rationalization, 29% to capacity expansions, and 11% to new products. On the following page, let me give you a few examples on the investment projects that concluded last year. In Pfullendorf, we invested in two key projects.
Firstly, we built a new modern customer training center spanning 3,500 sqm to enable state-of-the-art formats and exhibitions for a large number of customers. In total, we invested EUR 37 million over four years. Second, we insourced the production of Duroplast seats and lids, investing EUR 8 million over the last two years. In Pune, in India, we invested CHF 4 million, starting the production of drainage PE pipes for the local market. Let me now comment on the 5-year development of our industry-leading ROIC and free cash flow. We have increased the return on invested capital to 23.2%, only slightly below the 5-year average, which is positively impacted by the extraordinary high values in 2021 and 2022, driven by the COVID-19 home improvement trends at the time.
Turning to the free cash flow, despite the market decline since mid-2022, we have a stable free cash flow generation accumulating around CHF 3.3 billion since 2021. This corresponds to an average and high free cash flow margin of 20%. Let's turn to the dividend. For 2025, the board of directors proposes a dividend of CHF 12.9, an increase of 0.10 or 0.8%. This is the fifteenth consecutive year with an increasing dividend per share. Since the IPO in 1999, the dividend has continuously increased apart from 2001 and 2010. The payout ratio of 71% of net income is just above our policy of 50%-70% payout corridor. This proposed dividends mean that the dividend per share has increased by 55% since 2014.
We're now coming to the share buyback program. In September 2024, we started the current 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 2025, we have bought back around 229,000 shares, amounting to CHF 126 million. With the current dividend proposal and the ongoing share buyback program, Geberit continues its stable and attractive distribution policy, which has been applied for many years. This attractive distribution policy is reflected in the cumulative payback to shareholders over the last five years. During this period, the whole free cash flow amount of CHF 3.3 billion was paid back to shareholder via an attractive mix of dividend payments and share buybacks.
In 2025 alone, we distributed CHF 503 million to shareholder through the dividend and the share buyback program. These numbers confirm Geberit's ability to consistently generate stable cash flows over an extended period, even during crisis, and our commitment to a shareholder-friendly distribution policy. With this, I hand over to Christian for the 2026 outlook.
Thank you, Tobias. Let me start our market outlook with some preliminary remarks. The outbreak of the war in Iran two weeks ago and the heightened geopolitical tensions significantly increased the macroeconomic uncertainties. This makes a forecast of inflation, interest rates, consumer confidence, and so on, all important drivers for the construction industry, very difficult. The following market outlook, therefore, is made under the assumption that the war in Iran has no significant impact on the macroeconomic environment and therefore the demand for the building construction industry, except for the Middle East region. For the Middle East region, we are currently refraining from a market outlook. However, keep in mind that we only generate 3% of our total net sales in the Middle East. The direct sales impact of the escalation in the region on the group is therefore limited.
With these preliminary remarks, let me now start with Europe and the new build sector. In Europe, overall building permits stabilized in the first nine months of last year since the still slightly declining non-residential building permits were fully offset by the growth of residential building permits. Therefore, we expect, after the strong decline over the last three years, a stabilization of the new build activities in 2026. Compared to the new build market, we expect a growing environment in the renovation sector, which accounts for around 60% of our business. Indicators for renovations started already in the course of 2024 to improve and have continuously improved since. In particular, housing transaction increased by 11% in the first nine months of last year, indicating a positive renovation market this year.
Based on the stable new build and positive renovation market, we expect slight growth in Europe in the course of 2026. However, no broad recovery yet. Outside Europe, we expect a mixed picture for the building construction industry. Some markets should see good demand, for example, India. Other markets will continue to decline, for example, China, due to the collapse of the new build sector in China. Let me finish our construction market outlook with a trading update for January and February. Like-for-like sales in January and February were up low single-digit, somewhat negatively affected by wholesalers pre-buying in December, and selectively by bad weather in North Europe. Let me finish our market outlook with an update on the direct material and energy prices. We expect a sequential increase of direct material prices in Q1 this year compared to Q4 last year.
However, year-on-year to a level still below Q1 last year. Due to the continuous increase of copper prices since several months, we will implement a selective extraordinary price increase for copper piping products of 5% as of April this year. This price increase is not related to the outbreak of the war in Iran two weeks ago. We took this decision already before. Energy prices are also expected to sequentially increase in Q1 compared to Q4 last year, but year-on-year also to be still below Q1 last year, despite the price surge since beginning of March due to the escalation in the Middle East. Please keep in mind that our energy costs are limited and represent only 1.9% of net sales. Thereof, we only spend 1/3 or 0.6% of net sales for natural gas.
Let me now come to the Geberit outlook this year. I start as usual with our new product introductions. In the product area, Installation and Flushing Systems, we will introduce customized finishes for our WC actuator plates, Sigma40, and our urinal actuator plates, Type 40. 50 customized finishes will allow for matching colors and materials to major faucet brands to enhance our offering for premium projects such as luxury hotels or high-end condominiums. Another new product is the upgraded prefabrication installation system called GIS-Pro. The system increases rigidity for better transportation of prefabricated installation modules and reduces weight by 30%, all at a competitive price point. An intuitive software solution for professionals facilitates the planning of these prefabricated GIS-Pro modules. In Bathroom Systems, we launched three important innovations in the area of showers this year.
The first product is the CleanFloor30, a new slip-resistant shower surface available in three colors. The integrated hair comb and seamless surface ensures easy cleaning for the end consumer. Second, building on the well-known Duofix system, we introduce a new shower installation frame that enables up to 3x faster installation compared to conventional systems. It is compatible with both the new CleanFloor30, but also third-party shower surfaces. The third shower novelty is the slim shower channel CleanLine50, available in stainless steel or black. The established effortless installation makes it an easy-to-install solution for installers. For end- consumers, we have developed a new and easily removable hair comb that facilitates cleaning and maintenance. Also, in the area of Bathroom Systems, we are launching a new wash place siphon this year.
Thanks to its new space-saving design, it's no longer necessary to cut out the back wall of bathroom furniture. In addition, its optimized hydraulics allow for a high flow rate, which prevents blockages. Finally, in Piping Systems, we are extending the assortment of two key systems that we have introduced in recent years: for FlowFit and for Mapress. For FlowFit, we launch connectors to third-party systems. These connectors have several advantages. For example, allowing in a renovation setting to connect existing pipe systems in a stack with FlowFit in the floor distribution. For Mapress, we are releasing union nut adapters, which will allow flexible connectors with other systems and valves, which is particularly advantageous in industrial applications. Two other important initiatives this year include new marketing activities and further efforts in the area of IT and digitalization.
We will leverage our new state-of-the-art training and exhibition center in Pfullendorf to roll out new training and experience formats for our professional customers in Germany. Let me show you a short video about this new training center. Another key marketing focus this year are architects and designers. We will open a new Geberit Experience Center in Milan to showcase the design and functionality of our products in front of the wall. Finally, we will launch a new dedicated B2C marketing campaign to increase end consumer brand awareness and demand for bathroom systems, especially for shower toilets and the entry-level shower toilet, Alba. Besides marketing, we will also further invest in various IT and digitalization activities this year, specifically in AI initiatives. In total, we will increase our operational expenditures for these initiatives by CHF 20 million this year.
Let me finish our outlook with our CapEx plans for 2026. Overall, we plan to invest around CHF 230 million this year. A major CapEx initiative will be in the area of logistics with two main projects. The first project consists of the construction of a new greenfield logistics center in Ibbenbüren, Northern Germany, as already announced last year. The purpose is to increase capacity and to mitigate risks from our existing main logistics center in Pfullendorf. The second project comprises a new distribution center in Bromölla, Sweden, to consolidate and modernize our logistics activities of our ceramics business in the Nordic region. Both logistics projects are currently in the final planning phase. Construction starts are both planned in the second half of this year, with the objective to ramp up operations in 2029-2030.
Total CapEx for both new logistics centers is estimated to be around EUR 250 million and will incur over the next four to five years. In addition to these two large projects, we continue to invest in our production network to address selected capacity needs and also further improve productivity. Let me give you three examples. We are investing in our Swiss plants CHF 12 million until 2028 to increase the production capacity for our supply piping system, FlowFit, to cope with the ongoing strong market demand. In Langenfeld, our plant for metal pipe systems in Germany, we will commission fully automated production lines for straight metal fittings with a total investment of EUR 17 million.
The last example includes four fully automated pressure casting cells for wall-hung WCs and wash basins in two of our ceramic plants with a total investment of EUR 8 million until 2027. Let me close our presentation with a short summary. With a currency-adjusted top-line growth of 5%, we achieved strong growth last year in an only flat market. These results confirm that we are successfully navigating the significant market decline of the European building construction sector over the past 3.5 years. The strong top- line was driven by our undiminished market presence and sales efforts, new product introductions, and sales initiatives outside Europe. Excluding the one-time impact of the Wesel plant closure, we improved our industry-leading EBITDA margin, thanks to further efficiency improvements. This led to a strong EPS growth of 8.5%, excluding plant closure costs and currency effects.
We again focused last year on the execution of various strategic and operational initiatives. We demonstrated with an increase of free cash flow of 7% and a free cash flow margin of 21% that we generate very high and industry-leading cash flows even in a flat market environment. Finally, the employee survey proved the high level of satisfaction and commitment of our organization. Geopolitical risks and the macroeconomic uncertainties have significantly increased since the escalation of the Middle East conflict two weeks ago. Under the assumption that the escalated conflict has no major impact on the macroeconomic environment, we expect in Europe overall a slight market growth. However, no broad recovery, and outside Europe, a mixed picture. We expect sequentially increased direct material and energy prices in Q1 compared to Q4 last year. However, year- on- year to a level still below Q1 last year.
Our focus this year will be again on various strategic and operational initiatives, for example, the introduction of new or recently newly introduced products, several new marketing initiatives, order renewal and expansion of our logistics center. Geberit remains strongly positioned to further expand its leading market position also this year. The fundamental success factors of our business remain a proven and stable strategy, a resilient business model, strong focus on innovation, efficiency and productivity improvements supported by continuous investments, a functional and lean organization with a high level of expertise. Finally, a strong and down-to-earth corporate culture that suits our customers and is lived by motivated employees. This is the foundation for further value creation also this year for our customers, our employees, and our shareholders. With this, we are at the end of our presentation.
On this slide, you see the important key dates this year, and we are now ready to answer your questions. Mr. Rafaisz.
Thank you. I have three questions, please. The first one will be on the pricing in 2026. You mentioned the 5% extra increase related to copper. How much would that be then on the group level? And at what point would you consider additional extra price actions for gas prices?
This extraordinary price increase for copper pipe system has a positive impact, but a small positive impact on group level because the amount of sales that you generate with these copper pipe systems is not as big. To give you an indication, we don't wanna disclose the number due to competitive reasons. We have CHF 1 billion sales with pipe systems. We have roughly 10 systems, and copper is rather a smaller one. A tick positive impact on group, but not to be overestimated. What would it take to take further price increases? I guess this question is in the context of the last two weeks, I assume. For the moment, we have not taken any decision because obviously there's too much volatility and uncertainty. We have been impacted on the cost side in that first two weeks, basically only on two levels.
One is energy. As I said before, we have about 0.6% of net sales, CHF 20 million costs in natural gas. There we have an impact. The second one is on the plastic part, which is highly correlated to oil, or in other words, to commodity plastics. The share of commodity or the cost for commodity plastic is also relatively low. We have only about 2% of net sales are related to commodity plastics, and there we have seen an impact in March. All the rest, we have not yet seen direct impact. Therefore, it's too early to decide should we take any pricing actions or not.
That's extremely helpful. Thank you very much. Second question would be on the investments you're making, so CHF 20 million extra. How much of that is just purely AI- related?
We said, you know, it's half on. It's AI and digitalization is one part. Within that, it's difficult to make a clear part, but it's a larger part of the CHF 20 million is on IT and digitalization. There's a lot of preparation work going in there, so making data AI ready. You know, whether that's AI or digitalization, hard to say. I would really put that into one block, IT and digitalization, which is the larger part of the CHF 20 million.
Great. Thanks. The last question is on the CapEx. You framed the 2026 outlook with the logistics centers, but it will be a 4- to 5-year project, right? The two logistics centers. Would you say the CHF 230 million is a good run rate for the next couple of years, or is there a reason it will go up in 2027 since you only start building in H2?
We expect CHF 230 million roughly an average for the coming years. Yes.
Nathalie Olof-Ors from the Agence France-Presse. You said that the Middle East is about 3% of total sales. Could you give us a bit of color on your activities in that region? How many employees, factories, and what kind of market you're active in those markets? How does that affect your supply chain as well?
The business in the Middle East accounts for around 3% of net sales. We have about 70 sales employees in the region. We don't have any manufacturing facilities. They are largely concentrated in the Gulf region. In Dubai, we have the head office for these countries. We have also activities in Israel with people on the ground. We don't have any sales in Iran and people since many, many years, since the sanctions, so there's no business there. The actual situation in terms of supply chain is challenging, obviously. It didn't come to a standstill, but we have, especially in terms of supply chain, some challenges in terms of delays, rerouting. Some freight forwarders also canceled their transportation, so it's challenging, more difficult, but it's not at zero.
Maybe a word to the activities on the ground in terms of building construction, maybe not only supply chain. Obviously, that's impacted to a certain extent, but construction sites are operating as far as we understand. Showrooms, for example, are open, but all, of course, on a maybe a little bit lower level, but construction activities did not come to a standstill neither.
Do you source a lot of material from that region or that goes through-
Mm-hmm.
through these routes? What comes exactly from there?
Directly, we do not source a lot of raw material from that region. For example, the commodity plastic I mentioned before, we source from Europe. The price impact, for example, on the commodity, that has an impact. On the supply side, we don't have any frictions at the moment. We get all our raw material, so there's no impact short-term from that perspective.
Mr. Islam.
Thank you. Two questions. First of all, a cash flow question. You mentioned the VAT payments had an impact on net working capital. Can you provide a number here and maybe also a number for the cash out this year in relation to the Wesel plant? That's the first question.
Good. VAT, it's a double-digit figure, but a relatively low double-digit figure. Cash out is very small in 2025. The majority will be in 2026. The bulk is the restructuring provision, which will be paid out in this year, and the depreciation, which is non-cash by nature.
Thank you. The next question in regard to the Wesel plant as well. As you, I think, already face now all the costs or more or less all the costs in 2025, what's the current status of this plant or maybe the positive cost effects for this year? Do we already see some productivity gains in the network for this year, or you still stick to the plan next year?
The plant will only be closed this year, and as a result, the main benefit from that will be as of 2027.
Thank you.
Quick question from the call? Yeah. It's Arnaud.
Could you remind me on the price increase you plan on group level, as of beginning of Q2?
How much we did or-
Yeah, how much you're going to have price increased?
Around 1%.
About 1%.
Yeah.
Okay. Second question would be on the share buyback program. I think as of March, you bought back I think some CHF 145 million, something like that. Program is around CHF 300 million, ending September this year. Do we have to expect now an acceleration of this program, or you will just end up with only CHF 200 instead of CHF 300 million? What do you plan for after September 2026?
We're not commenting on ongoing share buyback programs also because it's a delegated program which works on algorithm, and therefore, the completion rate will really be seen at the end. As for a potential follow-up, we have not yet decided on that, but if you look at our history, there's a certain likelihood that we will. Again, that has not even yet been discussed at board level.
Thank you.
Flueckiger .
Yeah. Morning, gentlemen. Thanks for taking my question. I've got three, and I'll take one at a time. Regarding the new products that you were talking about last year, Alba, Duofix, I think the FlowFit, and there was another one, if I remember correctly. Can you talk about the sales momentum that you have seen in January, February for these products and, you know, try and figure out whether there's a continuation of the positive momentum that we saw last year?
We see a continuous positive momentum.
Okay, thanks. No slowdown or it's just above average and
Slowdown would be a contradiction to positive. It's still going well.
Okay.
Positive.
Well, it's a matter of first or second differential, right?
Okay.
Second question is on Germany. Just wondering what kind of market sentiment you're getting there from wholesalers and what kind of order backlogs we're looking at for installers recently.
I would say relatively unchanged and very much aligned with what we say about Germany. A better environment this year than what we have seen last year. Slightly positive, but also clear indication that there's no broad market recovery expected this year. Pretty much in line with our statements before.
Okay. The order backlogs from installers?
Oh, sorry. The order backlogs are no new numbers. That's 10.1 weeks, if I remember correctly. That's a decline if you compare it year-on-year. That's the installer backlog you're referring to, I guess. 10.1 weeks.
Okay, thanks. Q4 was impacted by restocking, right? Ahead of the because they wanted to get these sales bonuses. Just wondering, do we have any new indications on inventory levels at wholesalers and what their procurement plans are, as of March?
To be honest, no. We don't have any indications where they are at the moment, therefore, I can't give you a precise answer. You're referring to the slide.
Yes.
pre-buying in December due to
Mm-hmm.
since they wanted to reach bonus levels.
Right.
Yeah.
Okay, thanks.
Yeah.
I'm not sure if I got it correct. Just for understanding, the January, February 2026 sales are in the low single-digit percentage range higher than-
Correct
last year. Thanks.
Yeah. Like for like, low single-digit growth. Correct.
We have a couple of questions from other participants. From Pujarini Ghosh, Bernstein: How should we think about the growth and margins for 2026?
We will, as usual, give a guidance for these two numbers with our H1 results.
A question from Elodie Rall from J.P. Morgan: What are your expectations for new products contribution in 2026 versus 2025? I know already asked, but for the overall year.
I think as every year, I must say, new products are important in terms of growth contribution. We generate around 20% of our annual net sales with new products not launched in that year. We count new products for the last four years. Also in terms of growth contribution, that was the case last year. We also consider this year as an important driver for growth, new products. How much it will be exactly, I don't know, but I'm sure it will be an important contributor. Also referring to the still positive dynamic in January, February, asked by Mr. Flueckiger, of these important new products.
Another question from Elodie Rall, again on outlook. What is your Q1 sales expectations at this stage given weather impact mentioned and the Middle East impact?
As just said before, we said what happened in January, February. We don't comment March. Low single-digit growth, which was also partially impacted, selectively impacted by some bad weather in the northern parts of Europe.
Next question from Jon Bell from Deutsche Bank: Can you clarify if the January, February figures is expressed in local currency terms?
Yes. Like for like means that we exclude currencies and also any working day effects.
A follow-up question. The next question from Jon Bell: Has there been any direct impact of the war on any of your sites?
On our sites? No. Maybe that's a question coming back to before. Of the 70 employees, if that is the question, obviously, these people are mostly working from home at the moment, at a little bit lower level. That's the biggest impact on our sites, that the sales organizations are working from home in the region.
Okay. I'm done so far, I think. Maybe some other questions from the conference.
Maybe two more questions. One on the share buyback. You already mentioned the share buyback, but you also had you're trading in your own shares and you show a sale or sale proceeds of CHF 60 million in the cash flow statement. Could you explain the rationale behind the sale of own shares?
We're not trading our own shares. We're not making market making or so. We have an option program, and that's related to redemptions of options by employees, which leads to a positive cash inflow on our side.
Okay. Thank you. The second one would be about the contingencies. Guarantees and sureties, they went up from CHF 130 million to almost CHF 200 million. What was the driver behind this?
Say again.
The guarantees and sureties in the notes of your financial statements. They went up from CHF 130 million to almost CHF 200 million. Could you explain the rationale or the driver behind the increase in the contingencies?
That's only linked to the. There's been a new policy applied, and then there's the sales increase, but there's nothing special behind that.
Okay. Thank you.
Two more questions from media people. First of all, Marvin Oppong from Südkurier: Can you comment on the plans for Pfullendorf? Is there any plan of increase in personnel, especially after the recent opening of the new training center?
No, not structurally. The major driver for personnel in Pfullendorf is volume, sales volumes and production volumes. With increased volumes in production, we also need more people. Structurally, there are no plans to increase the number of people in Pfullendorf.
Okay, second one from Danny Callaghan from Thomson Reuters. You have given your market outlook under the assumption the conflict in the Middle East has no major impact on the macroeconomic environment. How does your outlook change in the event the conflict does have a significant impact?
That was exactly the reason why we made this disclaimer. The point is, for number one is, why did we make this disclaimer? We have no expertise in macroeconomics. We have no expertise in geopolitics. Why should we think about that at all? Important for a company like Geberit is that we are prepared to whatever might happen. Being prepared means that we have a clear strategy which we will continue and that we are flexible to various scenarios. If you're following Geberit for the last couple of years, I think we have shown that we are very flexible to react to various scenarios, and that's where we are focusing on. I don't wanna comment and speculate what could happen, but whatever happens, I'm sure we will cope with this situation.
If you allow me a bit of a provocative statement, the more difficult, the more uncertain, the more challenging the world, just from a business perspective, this is somewhat positive for Geberit, because that's always, to a certain extent, an opportunity. Therefore, whatever will happen, I'm pretty sure that we will leverage this opportunity or whatever scenario might happen. If you want to think about various scenarios, I would ask macroeconomic and geopolitical experts. We are selling toilets.
The second question from Danny Callaghan: How will the removal of climate reporting and certification requirements in the U.S. and amendments to EU Corporate Sustainability Reporting Directive affect future investments and strategy?
They will not have any impact on our investments. I take the question, expand the question a bit also to Europe, where all the sustainability reporting is at the moment on the construction, let's say, or might change. This will not have an impact on our investment. It will have an impact on our reporting, of course. There we will adapt. Our sustainability strategy was not largely driven by policies or even, definitely not by sustainability reporting policies. We have a very clear sustainability strategy which we are going to execute, and that will not be influenced, definitely not in terms of investments, by regulatory reporting changes in the U.S. or in Europe.
Okay, the next question from Chase Coughlin from Van Lanschot Kempen: Can you elaborate on the moving parts of the margin developments in 2026? Wage inflation is 3%+. Pricing now is more than 1%, higher investments in IT, et cetera. Should we expect margins to be as high as 2025, excluding plant closure costs? Any colors here would be very helpful.
No outlook for the margin, of course, but the main drivers to summarize and repeat: pricing, 1% as of April, maybe tick better due to the extraordinary copper. On the cost side, direct materials in the first quarter, still below the first quarter last year. The same is true for energy. What happens in the rest of the year? No clue. If it gets worse, we have the opportunity to adjust prices. On the personnel side, wage inflation correctly, we expect around 3%.
Q-
Maybe, sorry, the last one which is not to be forgotten, but we continuously work on efficiency and productivity improvements also this year. We don't have a number for that, but as a reference, as you see in the presentation, we improved productivity every year by 3% on average in the plants. There's no number for that, but it's obviously also important driver. I think with that, you can make your own equation.
Next question from Harry Sheridan from Rothschild & Co., Redburn: when you talk to installers, if we do get more cost inflation, how much more price inflation do you think you can pass on? Is there a risk that customer affordability in the renovation market is already stretched, which makes price increases difficult? you are confident any costs can be passed on?
The price elasticity in our industry in general is relatively low. This has to do with the fact that we are all component suppliers. We are not selling complete bathrooms where the end consumer decides, "Okay, it's too expensive, I don't do it." What you are asking for is typically a building. Also, renovation is often a complete apartment renovation. That price point, there you might have or you have an elasticity as a consumer. "Do I do a new build if it's getting CHF 100,000 more expensive or not?" It doesn't depend directly on the component. We are contributing to it. Therefore, we can pass on. That's one part of our pricing power, besides market strength and reputation and strong products.
Therefore, the price elasticity specifically for our components and even more specifically for Geberit is relatively low. Yeah.
Yeah. Maybe you kind of answered my question already with the pricing, price increase copper-related product. But the fact that you have now achieved an adjusted EBITDA margin of 30% already in 2025, I just wonder if you take this heavily into consideration when it comes to reaction on cost inflation, to do further price movements up, or because you reach this upper threshold already.
I'm not sure if it's the answer what you're asking for, but we are not looking just at the number, and then we are 30%, and now we have to take actions. I think the philosophy is where do we have opportunities? Of course, can we pay for it also from a margin point? If we have opportunities, we want to invest. The marketing initiative this year is a very good example that we spend more for marketing because we have a decent, nice margin, but also the right moment, very much linked now to shower toilets, the Alba. We have now the right product, let's put more gas on marketing. The key is more opportunities, creating value than just the number. Are we now at 30.0% or 29.8%? Is that the answer to your question?
Yeah, kind of. Maybe phrase it differently. You are not worried of a margin that could be above 30%, I don't know, due to your customers coming and saying, you know, that tops your upper band, please decrease prices.
Before we throw money out the window to allow the margin below 30%, we will allow a margin above 30%. We had that in the past as well. 2022, 2021, the margin was 31% due to the strong, COVID-induced bathroom renovation trend. It's not a law that we are not allowed to be above 30%.
Thank you.
This is it. Thank you for your questions on the webcast. For the people in the room, as usual, colleagues from our organization have prepared two new product introductions which we'll introduce this year. One is on the shower side and one is on the prefabrication side, which will give you a hands-on insight into these new products. Thereafter will be also a short small apéro to ensure that the margin stays below 30%. If I may propose that we divide the room in half, and then the left side, right side, and about seven, eight minutes, and then we switch. Thank you for your participation.