Thank you for the introduction, and good morning, ladies and gentlemen. Welcome to Geberit's nine-month results conference call. We will start with the third quarter figures, then comment on the nine-month development, and finish as usual with an outlook. Geberit delivered strong results in Q3. Let me start with the key statements for the third quarter. First, a net sales growth in local currencies of 5.2%, driven by all three product areas. Second, an EBITDA margin only slightly below previous year, despite substantial higher direct material and energy price. Third, a strong EPS growth of 6.7% in local currencies and 8.5% in Swiss francs. Let me now give you some comments on the sales development in the third quarter. Net sales in Swiss franc increased by 5.3% and reached CHF 824 million .
For the first time in five years, we did not have a negative currency effect on net sales. In local currencies, group net sales increased by 5.2%, supported by a sales price effect of around 3%. Let me turn to the regional development, again in local currencies. In Europe, net sales increased by 4%, driven by strong growth in most markets. In particular, we achieved very strong growth of 8% in our core markets, Germany and Switzerland. Outside Europe, net sales increased in Middle East Africa by 23%, driven by strong double-digit growth in the Middle East, despite the ongoing conflict in the Gulf. Net sales in Far East Pacific grew by 16%, with growth in all main markets, including China. Net sales in America increased by 12%, supported by easier comps in the previous year period.
I continue with the sales development per product area in Q3, again in local currencies. Piping Systems grew by 6%, Installation and Flushing Systems by 5%, while Bathroom Systems increased by 4%. The relatively stronger growth of Piping Systems was supported by the stronger extraordinary price increase in this product area. Let me now turn to the operating and financial results in Q3. We managed to grow all bottom line results, from EBITDA down to EPS, both in local currencies and in Swiss franc. The EBITDA margin reached 30.2%, which represents a slight decrease of -40 basis points, despite the significant increase of input prices. Direct material prices were, with 8%, significantly higher than in Q3 last year. Energy prices were even up 33% in Q3 compared to Q3 last year.
However, in absolute terms, EBITDA still increased, both in Swiss francs and in local currencies, and even when adjusting for the one-time costs in the previous year. Net income increased disproportionally in local currencies by 5%, and the net income margin reached 20.1%. Earnings per share reached CHF 5. 13 and grew in local currency stronger than net income by 7%, thanks to our share buyback program. Let me now continue with a review of our net sales development in the first nine months of the year. Net sales increased by 3.6% to CHF 2.53 billion , negatively affected by strong currency effects. Negative currency effects led to a net sales loss of CHF 52 million , or -2.1%.
In local currencies, net sales increased by 5.7%, driven by an improved market environment in Europe and strong demand for our products across most markets and all three product areas. The top-line growth was driven by volume, with a growth rate of around 3.5%. Increased sales prices contributed around 2% to top-line growth. This brings me to the regional net sales development in Europe in the first nine months. Again, all growth figures refer to growth in local currency. All main countries and reporting regions, except Western Europe, delivered strong growth. In Switzerland, net sales increased by 9%, supported by a base effect and strong market demand. In Benelux, net sales grew 6%, with growth in both countries, Belgium and the Netherlands. In Eastern Europe, net sales grew by 6%, with particularly strong growth in the Adriatic region and Poland.
In the Nordic region, net sales grew by 6% in an improved market environment. Net sales in Germany increased by 5%, despite a strong comparison base. Over the last three years, we achieved a cumulative sales growth of 14% in Germany, despite the significantly declined market. Net sales in Italy increased by 4%, despite a softening market. In Austria, net sales grew by 3% despite the very strong comparison base, with a growth rate of around 10% already last year. The only region in Europe where sales stagnated was Western Europe, with strong growth in Iberia partially offset by market-driven declines in France and the U.K. Let me now turn to the regions outside Europe. In the Middle East/Africa region, net sales increased strongly by 20% despite the ongoing conflict in the Gulf.
Net sales in Far East/Pacific grew by 9%, with double-digit growth in India and Australia, partially offset by the continued but fading market decline in China. In America, net sales were flat, with the previous year being distorted by extraordinary growth following the tariff announcements. Let me now comment on the sales development by product area, again in local currencies. Installation and Flushing Systems, as well as Piping Systems, grew by 6%, while Bathroom Systems increased by 5%. All three product areas benefited from strong growth with established and new products. I'll continue with the operating and financial results in the first nine months. All operating and financial results grew, even in Swiss francs and even when adjusting for the one-time costs in the previous year. I start with the discussion of the EBITDA development. EBITDA increased in Swiss francs by 3% and in local currencies by 6%.
The EBITDA margin reached, with 30.7%, almost previous year's levels, supported by a base effect from last year's one-time costs. Excluding the one-time effect in the previous year, the EBITDA margin decreased by 70 basis points, driven by a significant increase of direct material prices by 5% and energy prices by 11%, driven by the conflict in the Middle East. Secondly, a wage inflation of 2.3%, and thirdly, dedicated investments in marketing, IT, digitalization, and AI. We managed to mitigate these negative margin drivers with the following levers. First, our efficient and flexible production network, coping with the strong volume growth while at the same time keeping costs under control. Second, a positive sales price effect of around 2%. And thirdly, further efficiency gains in production and logistics. Thanks to our long-term-oriented natural currency hedging strategy, the significant currency losses had no material impact on our operating margin.
EBIT grew in the first nine months by 4% in Swiss francs and by 7% in local currencies. The EBIT margin increased by 10 basis points and reached 26.0%. The net income margin increased even by 70 basis points due to an improved financial result and reached 20.9%. This led to a net income growth of 7% in Swiss francs and 9% in local currencies. Earnings per share increased by 8% and reached CHF 16.23. In local currencies, EPS increased even by 10% versus previous year, disproportionately higher than net income, thanks to the accelerated share buyback program. The share buyback program launched in September 2024 was completed ahead of schedule in early June. Under this program, a total of 560,000 registered shares were repurchased for a total of CHF 300 million since September 2024. We launched a new share buyback program directly thereafter.
The new program, with a maximum volume of CHF 300 million, runs for a period of maximum two years. In total, under the completed and the newly launched share buyback program, we repurchased in the first nine months 509,000 shares for a total amount of CHF 269 million. This brings me to a few comments on CapEx and free cash flow in the first nine months of the year. CapEx increased by CHF 20 million, or 21%, to CHF 112 million, driven by higher investments, notably in logistics. Free cash flow decreased slightly by 3% to CHF 449 million, primarily due to higher paid CapEx. Let me now comment on our market outlook for the full year 2026. Our view has not changed since our H1 communication in mid-August. Geopolitical risks and the associated macroeconomic uncertainties remain high.
However, we continue to expect for the full year 2026 a slight growth of the European building construction industry, but no broad recovery yet. The new build sector, we see positive momentum emerging as indicated by the ongoing turnaround of building permits, which grew in Europe by 5% in the second half of last year and by 6% in the first half of this year. In particular, the residential building permits in Germany are recovering with a growth rate of 13% over the last 12 months. In the renovation sector, which accounts for 60% of our business, we expect the positive dynamics to continue. Outside Europe, we foresee a mixed picture for the building construction industry. Some markets see good demand, for example, India. Other markets continue to decline, for example, China, due to the collapse of the new build sector. However, at a slower pace than in previous years.
On the supply side, we expect sequentially for Q4 slightly higher direct material prices and higher energy prices compared to Q3. Let me now briefly comment on the Geberit priorities this year. We continue to have a strong focus on new products. For example, the new shower solution launched in April, but also important new products introduced over the last years, like the new Duofix, FlowFit, Mapress Therm, or the shower toilet, Alba. Other important initiatives this year include new marketing initiatives and further efforts in the area of IT, digitalization, and AI. In total, we are increasing our operational expenditures by CHF 20 million this year for these initiatives. Let me continue with our full-year guidance.
Under the assumption of no material changes to the current market environment, we expect for the full year a net sales growth in local currencies between 5% and 6%, and an EBITDA margin around previous year's level. Please keep in mind that we are facing somewhat more challenging top line comparables in Q4. In line with that, we expect sales development in October to be weaker than in Q3. For CapEx, we expect around CHF 200 million this year. Let me close our introduction with a short summary. Geberit delivered very strong results in the first nine months of 2026, with a net sales growth in local currencies of 5.7%. These were the strongest first nine months of the year since the COVID-related boom four years ago.
Despite the sharp increases in direct material and energy prices since Q2, as well as higher OpEx related to various strategic and operational initiatives, we managed to keep like-for-like operating margins almost on previous year's level. Earnings per share grew strongly by 8% in Swiss francs and by 10% in local currencies, supported by the accelerated share buyback program. For 2026, we continue to expect slight growth of the building construction industry in Europe and a mixed environment overseas. But irrespective of the market environment and geopolitical and macroeconomic uncertainties, we continue to invest in sales and marketing initiatives, innovation, in efficiency, and also in capacity to further strengthen our market position in and outside Europe in the short and in the long term. Thank you for your attention. We are now ready to answer your questions.
We will now begin the question-and-answer session. Anyone who wishes to ask a question or make a comment may press star and one on the telephone. You will hear a tone to confirm that you've entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. Our first question comes from Elodie Rall from JP Morgan. Please go ahead.
Hi, good morning. Thanks for taking my questions. First of all, on costs into Q4, what kind of evolution are you seeing, and could you remind us the composition of your cost, especially in terms of energy cost exposure? You've done a great job, it seems, in Q3 in terms of maintaining that to the lowest possible and only up sequentially versus Q2. But you're guiding for costs to increase a little bit also just in Q4. So, if you could give us some color there about the composition. And my second question, which is related to that, is your margin guidance for the year implies, if I'm not wrong, a 20 basis points increase in Q4. But in Q3, you had a margin decline. In Q4, you're guiding for cost up and maybe some weakness in volumes. So, how do you get margin up in Q4?
Does it require some further actions on your side from pricing or other actions? If you could give us some color on that. Thanks very much.
Good. Thank you, Elodie. First of all, on energy, if I got the first question right, it's the usual mix of gas and electricity that we're having, and with weighted on electricity, we have no hedges. Therefore, as indicated, we expect some higher costs on electricity. Overall, energy makes only roughly 2% of our bill, so in percent of net sales. When it comes to Q4 margin, indeed, you mentioned the most relevant points. Pricing, we expect a very strong contribution. We then also have, in the first nine months, a great weighing of the CHF 20 million of the additional OpEx. That is mostly due to the B2C campaign that we launched during summer, and that was predominantly active within Q3.
Okay. Thanks.
The next question comes from Martin Hüsler from ZKB. Please go ahead.
Okay. Good morning, everyone, and thank you for taking my question. The first question on personnel expense in Q3. I think it was flat year-over-year, even though we had 1% more FTEs and obviously a certain labor cost inflation. Probably, yes, we had a bit of a base effect with Wesel last year, but do we already see some first positive trends from the closure of Wesel? That's my first question.
Yes. Concretely on Wesel, no, not yet. That is really expected for next year, where it will be fully positively impacting the full year.
Why was personnel cost then in absolute terms on same levels as last year only?
We had a relatively low wage inflation in Q3, and then we had also reduced pension costs that contributed in that case with a higher interest rate that reduces the personnel cost that was in that quarter a significant driver.
Okay. Thank you for that. Then maybe on a smaller market, China, but still I think that sounds promising that in third quarter you saw more or less a slight growth, if I understood correctly. Can you maybe give us a view that you have on China? I assume that it is mostly new build where you are selling your products to. First of all, is this right? And what do you see in the underlying market?
First, you are right. We are predominant in the new build sector, but we shifted that already one, two years ago towards more renovation, also driven by the market because the new build market collapsed. We had the first quarter with a slight positive sales growth in China, but don't put too much emphasis on a quarterly figure in China because it's still very much project-related. All in all, we are still not positive for the market in China. We still think that the market is declining also this year, however, at a slower pace. Don't put too much emphasis on just one quarter where we had quite a good number.
Okay. Thank you.
The next question comes from Manuel Lang from Vontobel. Please go ahead.
Yeah. Good morning, everyone. I have a question on Germany. You've reported there very nice growth acceleration. Just wondering if you saw this rate also continuing in October, or what you can share of October would be nice to hear. Does this change your view on the German construction market also going forward? The second one would be on free cash flow. This was up in the third quarter, but you mentioned also timing effect of tax payments. Maybe you could share some details on how we should think about the fourth quarter. Should we expect a reversal of the trend? Because consensus, what I see is currently implying a sharp decrease in the fourth quarter as well. Thank you.
I take the first question about Germany, and the second one will be answered by Tobias. We are indeed very satisfied with our development in Germany, with the 5% growth in the first nine months, but we will not comment on the business in Germany which went into October. Also there, even Germany is a large market, don't put too much emphasis on just one quarterly number. The quarterly strong growth of 8% in Germany is not related to a quarterly change of our view on the market, but in general, we have a slight positive view on the German market this year, as already mentioned with H1 results.
When it comes to tax, we reiterate our guidance of 18%-19%. H2 is normally always a bit higher due to seasonality and also some expected less favorable development of tax provisions, which will likely increase then the tax within the given bracket for the full year.
Okay. But on the fourth quarter drivers, do you think we could extrapolate the trend we've seen now in the third quarter in terms of free cash flow? Because I think, or if I recall correctly, you were still targeting CHF 200 million CapEx for the full year, right?
No. Like what Christian mentioned before on China, the same applies on the free cash flow on the quarter. I would not look at that. One of the big reasons in Q3 for the positive, despite the higher CapEx, was the timing on the tax payment. Now I got it, what you meant, it was the CapEx one, not the P&L, and that is a pure timing effect.
Okay. All right.
Which will be reversed in the full year.
Okay. Thank you.
The next question comes from Arnaud Lehmann from Bank of America. Please go ahead.
Thank you very much, and good morning, gentlemen. Firstly, just a couple of follow-ups. Just on Q4, you mentioned a little bit of incremental inflation. Are you planning any extraordinary price increase in Q4, or are we now talking about Q1 2027 in terms of adjusting for fossil cost of inflation? That is my first question. Just maybe following up on your comments on Germany, I mean, still a good performance, even I appreciate your comment about just looking at one quarter is not necessarily a trend. Do you mind splitting maybe pricing and underlying volumes and market share gain, or at least a little bit of color to understand how you are performing so well in Germany? Thank you so much.
The first question, we are not planning any extraordinary price increase as of now. As we said already in the first quarter, we implemented an extraordinary price increase to compensate for the absolute impact of the raw material prices and energy price increases which we have seen. But also with the current level which we see now, we are not planning any extraordinary price increases at the moment. Second question, the volume price effect in Germany is pretty much similar to what we communicated to the group. In other words, we have a price effect in the first nine months of around 2%, and that also applies for Germany.
Thank you very much.
The next question comes from Martin Flueckiger from Kepler Cheuvreux. Please go ahead.
Morning, gentlemen. Thanks for taking my questions. I have three actually. I would like to start off with your strong performance in Switzerland in Q3. Could you elaborate a little bit what was driving that? Does it have anything to do with the changed regulations regarding taxation in Switzerland as of 2028, if I remember correctly? That is my first question. I will go one at a time.
Yes, this is one of the reasons. We believe that is pulling forward some demand, the change of the tax regulation as of 2029. Secondly, in general, an improved market environment. Thirdly, successful sales with our new products, for example, our shower toilet, Alba, but also other products which have been received very well in the market.
Okay. That gives me the bridge to my next question. I was going to ask you about the new products. Shower toilets apparently in Switzerland had a good run. I suppose, and please confirm, was that the case throughout Europe for shower toilets, but also for the other products in Piping Systems and the remaining product categories? That would be helpful.
Your hypothesis is correct. That applies also for the other markets, especially on the shower toilet side. We are growing the first nine months with our shower toilets double-digit in volumes and in net sales, and especially a substantial double-digit growth still with Alba now in the third year. More than 50% of our shower toilets which we have sold in the first nine months are Alba shower toilets, and that applies pretty much across countries, not specifically only in Switzerland.
Okay. Still no cannibalization with Mera, for instance?
Not even. Mera is nicely growing. In the first nine months, even slightly double-digit.
Okay. That's helpful. Thanks. My last question would be with regards to the expected net price effect in Q4 at the EBITDA margin level. If I saw this correctly, your EBITDA margin took a 30 basis points hit from the net price effect. Does that mean still a neutral price cost effect in Swiss francs? That's question A. Question B, what are you guiding for the net price effect impact at the margin level for Q4? Thanks.
Well, in Q3, we had indeed 30 basis points negative. Price effect is still ramping up in Q4, like the answer which I gave Arnaud. So we expect that the price effect will be nicely positive or stronger in Q4 when it comes to the implementation of the price increases. That part is still ramping up.
Okay. If I understood you correctly, the net price effect in margin terms is going to be slightly positive, not in absolute terms, right?
I have not commented in margin. As you know, we said it will go slightly up again as well, the raw material, and I let you do there the calculation. I would not like to be more precise than that.
Okay. Thanks so much.
The next question comes from Patrick Rafaisz from UBS. Please go ahead.
Thanks. Good morning, everybody. Two or three questions from me. Maybe the first, just a clarification. You talked about a slower October than Q3, and you also mentioned tougher comps in Q4. I am just wondering, because from memory, the tough comps were mostly in December due to the strong wholesale channel rebate benefits. Were the comps also tough in October, or were these two separate comments?
The comment I made referred to the Q4, because Q4 last year was the strongest growth with 6.4%, driven by a strong October, but also a strong year-end.
Okay. Understood. Thanks. Then, again, a follow-up on pricing. At H1, you indicated that the full-year pricing should be around 2.5%. Now with prices ramping up in Q4 further, is that still the right way to think about it?
We expect a full-year price effect of maybe 2%- 2.5%. Also, the price effect in the third quarter with 3% was technically seen a bit lower than what would have been expected, because we still have some deliveries, as usual, in July on old prices. Therefore, we expect the 2.5% full-year price effect more the upper end of the range.
Okay. Understood. Then the next one on the Q3 EBITDA margin bridge. Just wondering if you can split the 90 basis points of other cost impact. I mean, you talked about wage inflation being a bit lower, so I assume growth investments and energy and freight were the two main drivers here?
Energy and freight prices made the predominant impacts of that. Then we had as well, as mentioned before, the investment in marketing, IT, and digitalization, roughly on the same level. And the remainder then being the wage inflation. We had on the rest even a positive effect. So these three were negatively contributing, and the rest was slightly contributing positively.
Okay.
Summarizing again, energy, freight, and the investments roundabout on the same level, and then as to the effect, the wage inflation clearly lower.
Super. Then the last one for me is just on the Western European region, which was flat in local currency. Are still U.K. and France the drag here, and should we assume Iberia, for example, is growing?
This is correct. Iberia is growing nicely, and the sales in France and U.K. are slightly down, very much driven by, we think, weak market environment and declining market environment.
Super. Thank you very much for this.
The next question comes from Chase Coughlan from Kempen. Please go ahead.
Hi, good morning all, and thank you for taking my questions. Maybe starting off in terms of volumes. So second quarter, volume mix effect was around 7.5%. Now Q3, give or take 2%, and I think I heard you say that October was sort of slightly down versus Q3. Could you help me understand that direction of travel? Is that just pre-buying at Q2 and then some normalization, or is that just underlying market changes? Could you help me understand that sequential decline?
The main dynamic for volume this year is driven by a base effect. We had a very strong volume growth in the second half of last year, a volume of 5%, and this is the main reason why we have seen and also expect for Q4 a slowdown of volume growth this year.
Yeah. Okay, that's clear. I suppose a follow-up on that. You've touched on it already, but Q4 last year or December, you had the rebates, which creates a tough comparison. Is there sort of an expectation also to stock the channel quite a bit into December this year, or just nowhere near as much as what we saw last year?
No expectation about that because you just don't know. That depends obviously on the individual decisions and behaviors by the wholesaler.
Okay. Final question from my end. You've touched on the tax payment that supported free cash flow a bit in Q3. Could you quantify how large that was actually?
It was around CHF 20 million.
Okay. Perfect. Thank you very much, gentlemen.
The next question comes from Cedar Ekblom from Morgan Stanley. Please go ahead.
Thanks very much. My follow-up question is about what you can do on the cost side below gross margin. I think the business continues to show a pretty high degree of ability to variabilize costs that we would traditionally think of more fixed in nature. I think that example of your personnel costs being flat in absolute terms, even though having higher FTEs, is one of these points. So, with the price-cost spread becoming more of a challenge in the fourth quarter, can you talk about the initiatives you might take on your operating expenses or personnel expenses outside of energy or outside of traditional raw material costs that could help us understand the resilience of margins? Thank you very much.
We do not take any specific initiatives to save costs or to protect margins in Q4. That would be the absolute wrong decision. We have taken a pricing decision in the second quarter, which we have implemented now since June, that will accelerate. In other words, you will have a pricing effect of around 3.5% in Q4 versus 2% in the first nine months. That will obviously help. We always said we want to compensate in absolute terms and not in relative terms, because pricing is not about margin protection only. It is also about customer relation and also about competition. There is a good example in Switzerland that you also can be too aggressive with pricing at the moment. I think we find the right balance, and we will definitely not take any cost-saving measures in the fourth quarter.
As a reminder, if you wish to register for a question, please press star followed by one. Our next question comes from Charlie Fehrenbach from AWP. Please go ahead.
Good morning and thank you. I have one clarification question. Did you say sales in October 2026 were lower than October 2025 because of the high-comparison basis, or did you say October sales were lower than in Q3? My second question is, you had a huge growth of more than 20% in the Middle East Africa area as well in Q3. Do you not see still any negative effects at all through the war, or was the contribution to the sales more coming from Africa? Thank you.
To the first question, sales development in October was weaker than in Q3 this year.
Okay.
The second question, we have not seen any material impact on our top line in the region, in the Gulf region in the third quarter. Obviously, we have been affected at the beginning, basically in March and April quite severely, but we caught up relatively fast, especially in the Gulf region. The Strait of Hormuz is not a restriction anymore because we are delivering to the markets at the Persian Gulf now through truck deliveries and not through ship deliveries through the Strait of Hormuz. In other words, we are not affected at the moment. We do also not expect at the moment to be affected, but I want to be very careful with any forward-looking statements in the region for obvious reasons.
Thank you very much.
For any further question, please press star followed by one. Our next question comes from Yassine Touahri from On Field Investment Research. Please go ahead.
Yes, good morning. Thank you very much for taking my question. Again, a question on the margin outlook for the fourth quarter. If I understand, you are expecting pricing to be a bit better in Q4 than in Q3, but cost will also be somewhat higher. Energy is remaining a headwind, and you will have lower marketing expenses that should provide an offset. Volume at the same time are facing tougher comparable. My question is that, is it fair to assume that margin expansion could be challenging unless activity is particularly strong in November and December? Could this mean that your full year EBITDA margin guidance of around last year's level could be interpreted as a range of, let us say, 29%-29.5% rather than the margin exactly in line with last year?
Starting with the end, no change in the guidance. It is around, and we are not getting more precise. Then indeed, your calculations of what is known today is correct, but in Q4, there is always a high level of uncertainty. Also, the weight of Q4 obviously is less strong than the other quarters. All that contributes then to us reiterating the margin guidance we gave in August.
Thank you very much.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christian Buhl for any closing remarks.
Thank you for your participation and your questions. We wish you all a great day. Goodbye.