Earnings Call: Q4 2020

Jan 14, 2021

Good morning. I am the operator for this conference. Welcome to the Geberit Conference Call on First Information 2020. Please note that for the duration of the presentation, all participants will be in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. This call must not be recorded for publication of broadcast. At this time, I would like to turn the conference over to Mr. Christian Zun, CEO, accompanied by Mr. Ronen Fizer, CFO and Mr. Roman Sizer, Head of Corporate Communications and Investor Relations. Please go ahead. Thank you for the introduction. Good morning, ladies and gentlemen. Welcome to our full year sales conference call. We will first comment on our 4th quarter sales figures, then review our full year sales performance, followed by our guidance for the financial results in 2020 and finish with an outlook for Geberit this year. I'll start with the Q4. We recorded another strong quarter with a net sales growth of 6.8% in local currencies, driven by a very strong November December. The main drivers were no material restrictions for the building construction industry during the 2nd pandemic wave. 2nd, a strong growth in Germany, supported by the temporary VAT reduction. 3rd, a buildup of safety stocks of wholesalers during the 2nd pandemic wave, the opposite effect compared Due to Brexit and extraordinary currency driven price increases as of January this year. Let me now comment on the development in the various regions in Q4. In Europe, Currency adjusted net sales increased by 6.4%. In Germany, net sales grew double digits by 13%, Supported by the before mentioned temporary VAT reduction until the end of the year. Switzerland was up 9% Austria, 6% from 5% Benelux and the UK Ireland, up 3% And Nordic and Eastern Europe both up 2%. The only region with declining sales was Iberia with minus 4%. Outside Europe, we increased net sales in Far East Pacific by 16%, driven by very strong growth in China. We achieved a strong growth also of 12% in American, driven by increased demand for electronic faucets. In Middle East, Africa, sales were up 1%. The product areas have again developed differently in the 4th quarter. Installation and Logic Systems grew by 10% and bathroom systems by 8%. I'm just looking at show again a much slower growth dynamic with plus 2%, indicating to weakening newbuild segment and project business also during the Q4. I will now comment on the full year 2020 sales performance. Net sales in Swiss francs decreased by 3.1 percent to CHF2.99 billion. The sales decrease was driven by a negative currency effect of minus 4.4%. In local currency, we managed to increase net sales by 1.3%. We achieved these results despite the COVID-nineteen crisis, hitting also the building industry in the 2nd quarter. The crisis led to a historical sales decline at Geberit in Q2, the weakest quarter for Geberit at least We got listed at the Stock Exchange in 2019. However, we managed to compensate this historical decline with the recovery in the second half of the year. Overall, we gained further market share in 2020. This was also driven by the conscious decision not to reduce our customer presence during this unprecedented crisis And by the conscious decision to avoid short type work when demand collapsed in the Q2. The date development varied substantially by comp based depending on the degree and length of the lockdown and the business restrictions imposed on the building construction industry in the Q2. In markets where construction sites were closed, Corresponding to around 20% of our business, sales declined in average by around 10% over the full year 2020. These countries include France with minus 7%, Italy with minus 8%, Spain with minus 13 percent the UK Island with minus 16 percent South Africa with minus 17% and India with minus 24%. The remaining countries We're also impacted by lower construction activities during the 1st lockdown wave in Q2. However, The losses were compensated or even overcompensated again in the second half of the year. We recorded the strongest growth rate in 2020 in our core markets, Germany, Switzerland and Austria, Representing about 50% of our business. In Germany, net sales grew over the whole year by 7% Confirmed our ability to gain market share despite our already strong position and high market shares in these countries. The fastest growing product area was fast consistent with a double digit growth rate in these 3 core countries. Sales in Eastern Europe and in Nordics each increased by 3%, with high single digit growth rates of Behind the Wall Flushing Systems. Sales and benefits stayed on previous year's level. The strong growth of 70% in Netherlands was compensated by a decline in Belgium, where construction sites were much heavier restricted In Americas, sales were up by 2%, driven by the strong growth of electronic faucets Due to the increased demand for the hygiene related touchless products as a consequence of COVID-nineteen. Sales in polyspecific declined by a minus 7%, mainly driven by the before mentioned COACs in India. Sales in China increased over the full year despite the lockdown in the Q1. And finally, Sales in Middle East Africa decreased by 14%, driven by the before mentioned decline in South Africa and its difficult environment in the Gulf. Let me now comment The sales development for product area in 2020, again in local currencies. Platform systems were up 2.3%, supported by the Sarendus business and the strong growth of the shower toilet business. Installation and Flushing Systems grew with 2.1%, driven by the disproportionate growth of the high-tech-twelve Plushings Systems. Plushings Systems declined by 0.8%. The weaker development of Plushings Systems was driven The second half of the year, indicating to a weakening newbuild segment and weakening project deals. We now comment on our guidance for our 2020 financial results. The EBITDA margin for the full year is expected to be around 31%. The substantially improved profitability level is mainly driven by lower raw material prices, Non incurred marketing expenses of around CHF 25,000,000 and CHF 10,000,000 savings of non incurred travel expenses Due to the COVID-nineteen induced business restrictions, the full year tax rate Should reach around 15%. And CapEx is expected to be around CHF 150,000,000. Before I come to the outlook, let me briefly update you on our share IBAC program. Despite the crisis, we continue our share buyback program in 2020. In total, 356,000 shares have been bought back last year. Thereof, 260 2,000 shares at an average price of CHF406 under the program launched in June 2017. Under a new program launched in September, additional 94,000 shares were bought back. Let me now comment on our outlook for 2021. Obviously, the uncertainties due to the COVID-nineteen crisis remain to be very high. The situation around the various lockdown is Changing week by week. Also, the timing for a return to a more normal life cannot be predicted today. And as you know, we have a general very low visibility in our business with an order book of less than 2 weeks. Therefore, we refrain at the moment from providing an outlook for the building construction industry and raw material markets. However, let me comment on some of our key business priorities this year. As mentioned before, The COVID-nineteen related restrictions led to reduced marketing expenses of around CHF 25,000,000 last year. We aim to reverse this effect again this year and to increase marketing spend again on normal pre COVID level. To overcome the still existing restrictions for physical marketing events and activities, we will further and significantly shift The marketing mix to more digital activities this year. For example, we will replace physical fares in the first half of the year And complete digital events, so called Geberit Innovation Days for our professional customer groups. Another priority this year will be new product launches. Among others, we will introduce a completely new supply type system called Flowfit with several benefits and advantages for installers. And the 3rd priority this year will be the further expansion of our digitalization efforts With dedicated initiatives in marketing and products, including the buildup of additional IT capacity. In total, we will increase our spending for digital initiatives by another CHF 50,000,000 with strength compared to last year. Let me close our introduction with a short summary. Also the building construction industry and Geberit has been hit by the COVID-nineteen crisis with a historical sales collapse in the 2nd quarter. However, the decline has been compensated in the second half of the year, and we were able to gain further market shares in this crisis year 2020. At the same time, costs remain on a low level as the COVID-nineteen induced restrictions Did not allow to pursue the business in a normal way. In combination with the normalized sales level, This led to an extraordinary and abnormal circumstance not repeatable from its ability level. The main reasons for these strong results on top and bottom line were a strong financial fundament, A prudent crisis management avoiding overreactions. Our conscious decision not to diminish our customer presence Throughout the crisis and finally, a high flexibility of our organization. It is worth to mention that we achieved these results without restructuring or any people layoffs, Without changing our strategic agenda or harming our future potential, without material short term work And without financial support from the public sector or taxpayers. The crisis year 2020 has proven the resilience of our strategy and our business model, now also including the ceramics business, The quality and strength of our customer relations, the robustness of our supply chain, Our undiminished pricing power and our ability to generate strong cash flows also during the crisis. Finally, I want to close this introduction with the announcement of a change in the Executive Board. Roland, if will retire at the end of this year after being 27 years with the company. Although Roland will remain fully on board The end of the year, I want to thank him already now for his large contribution to the development of Geberit, especially in his role as CFO Over the last 17 years, the search for sensors has been initiated. This is the end of our introduction. We are now ready to answer your questions. But as outlined before, we did not answer any questions regarding the outlook of the building construction industry or raw material markets Ladies and gentlemen, we will now begin our question and answer session. And the first question is from Yves Polme, Exane BNP Paribas. Your line is now open. Please go ahead. Good morning, gentlemen, and happy to hear to all of you. Just a few questions on my side. Number 1, I think in the last call, you mentioned that you had about €20,000,000 of brand Cost in 2020, but also I think you had some extraordinary IT spending. I just wanted to check the magnitude of those and whether if you Could confirm that this will not be any of those costs will reverse in 2021. And then I guess my second question, I think in the beginning of the call, I didn't necessarily understand completely what you But I think you mentioned some extraordinary price increases in January. I just wanted to know if you could comment on those in light of the recent Raw material increases that we have seen. And maybe just a last question related to Germany. You mentioned that a lot of the demand came through because of VAT reduction. On the other hand, we've also seen that many households are I've seen their savings go up quite significantly in 2020. And it looks like in 2021, we're starting the euro at home again. So Spending is likely to revert back to the homes. Can you maybe comment on that? And if you're seeing this as a structural effect For the foreseeable future, although this is really hard to assess at this point, but any color on that would be really key Given the magnitude of the growth you've seen in this market, thank you very much. Thank you. Question number 1, We had extraordinary costs for the brand harmonization in 2019 2020. And in each year, we spent €10,000,000 for this brand harmonization. This will not occur anymore as of next year because the brand harmonization is finished. Secondly, we had extra or additional costs last year for increased activities in digital levitation of CHF 15,000,000 last year, CHF 15,000,000. This will continue this year. And on top of that, we will add another CHF 15,000,000 Because we are further increasing our efforts in this area. Next question, We made 2 extraordinary price increases as of January 1, purely driven by currency devaluation. One company was the U. K. And the other one was Russia. And these external price increases as of January Led to a strong pre buying effect in November December of last year. And the third question I understand if I understood correctly, you were talking about the home improvement trend in Germany. We see a home improvement trend not only in Germany, across the countries, but end consumers are investing into their homes, also in their bathroom And that we are also benefiting from this trend. Yes, thank you. I guess the question was this, but also I just wanted to know if The VAT reduction was the main driver for the growth in sales or if you think that, that home improvement trend Was also a key driver. I'm just trying to figure out out of the double digit growth, which is what? Yes. Home improvement was also a driver. Was the VAT the more important driver? We don't know. VAT played definitely a role, But we do not know the extent of that. We were growing the bathroom systems in the second half of the year in Germany, double digit. Thank you very much. You're welcome. And the next question is from Daniela Costa, Goldman Sachs. Your line is now open. Please go ahead. Hi, good morning. Thanks very much I have one question. Historically, over time, you've said you didn't want to have margins which were above 30%. And I wondered first if that comment is still valid. And at the time, you mentioned you would reinvest When margins got above that level, you're now above that level. Can you give us a little bit of color on if the end markets continue to be strong, What are you going to do in terms of how will you reinvest those margins? You already have a return quite a lot through the dividend and the buyback. So how shall we think about what incremental growth can you get from that reinvestment going forward? Thank you. Our target range for the EBITDA margin of 28% to 30% is still valid. We don't want to go above the 30%. The reason that we have been above the 30% last year were basically 2. One is we have record low raw material prices. And secondly, as I said during my introduction, we have not been able to spend especially marketing As originally planned, we estimate that we have not been able to spend around CHF 25,000,000 last year, And we plan to invest this marketing budget again this year back to a normal level. And the last reason was also COVID-nineteen related restrictions, for example, of traveling, where we have not been able to spend, which we will spend again once the pandemic The next question is from Martin Huttler, Commerzbank. Your line is now open. Please go ahead. Yes. Thank you. And I have two questions. First of all, what's your assessment of The new lockdown measures in Switzerland. Are wholesaler shops open? Or Are only showrooms being closed? And what do you expect is the impact if you compare it to the Last year's lockdown in Switzerland. As far as we understand this morning, The showrooms for sanitary products will be closed as of Monday in Switzerland, but The business relating to professionals, for example, pickup shops where you can pick up sanitary materials will be open as of next That is our current understanding. Therefore, we do not believe that there is a material impact at the moment on our industry driven by the measures communicated yesterday by the government in Switzerland. Okay. Thank you. And maybe the second one, you don't want to talk about raw material prices. And I was just wondering a bit why are you so cautious about this topic because we see movements upwards in the 4th Quarter which should already kind of hit your raw material prices and your purchasing of raw materials. Just why not giving a guidance as usual? Because these are 2 different topics. We are not giving an outlook for the raw material prices, but I'm happy to comment on the recent development of what happened over the last couple of weeks. And there you're right, raw material prices went up substantially over the last couple of weeks. Also in January, They went up substantially. To give you a flavor, commodity plastics, important raw material for us is up 10% in January. Special plastics are even up 20% in channel. Also, steel went up Substantially over the last couple of weeks, we expect feed prices in January to be 15%, 1.5% So we have seen a recent strong increase in raw material prices. The only thing what we don't want to do is to give an outlook for raw material prices for the next coming weeks and quarters because, as you know, we are not hedging Our raw material prices, we are exposed to the volatility and the volatility and uncertainty is high. Okay. Thank you. Welcome. And the next question is from Andre Kukhnin, Credit Suisse. Your line is now open. Please go ahead. Good morning. Thanks so much for taking my questions. I'll just pick up on the last one. Do you plan any further price action beyond the what you've got FX related in U. K. And Russia. We plan a regular price increase as of April of around 1%. And is it safe to assume if spot prices stay where they are, you would increase So by the high percentage to offset? Or do you At the moment, we do not think about any extraordinary price increases Driven by the raw material price developments. Even at the current spot prices? Yes. We're not thinking about extra price tweaks at the moment. Thank you. And if I may just ask on German market, So I'm kind of thinking about the discussions we've had over the last few years, the kind of market that was constrained by capacity and kind of underlying demand was there, but struggled to grow To the extent, and now it kind of took COVID pandemic for it to grow 7% for you. Do you think there are any learnings there in terms of maybe how Columbus now operates and what they were able to do in the second half of twenty twenty that can be taken forward? Or was it just kind of restock and extraordinary measures, extra time, work, etcetera? One of the important drivers for our development in Germany last year was that we have been able to gain market share during this crisis. As I said during my introduction, we did not reduce our customer presence. We even intensified our interactions with customers also in Germany. And secondly, we also used some issues of competitors who have delivery Also in Germany, that was one of the reasons why we have been able to gain market share. And the second one is a general The fact that Geberit, as you know, in these markets like Germany, but also in Switzerland in Austria, we are growing and outperforming the market Largely by our off selling strategy, selling higher value added products, which do not require substantially more installation time or capacity of installers. And the best example, obviously, shower toilets. We have been growing double digit with shower toilets in these markets, also in And then allows us to pay market share also in times of constrained capacity of dollars. Very clear. Thank you. And maybe just lastly, on the tax rate for 2021, can you comment now already? The tax rate should remain somewhere between 15% and 15%. Great. Thank you very much for your time. And the next question is from Raimo Wazana, Noye Huttig, Straubank. Your line is now open. Please go ahead. Yes. Thank you. Good morning. In the Q3 conference call, You were actually quite cautious on the margin for the Q4 already pointing to increasing raw material prices. If I'm not mistaken, you even guided for a potential reduction of the margin year on year, not only sequentially. Now as it turns out, with this 31% EBITDA margin guidance for the full year, it seems that the Q4 EBITDA margin It will be around 300 basis points above the prior year. So what was responsible for this quite Significant better margin development in the 4th quarter compared to your view on the conference call just about 3 months ago. There was one first of all, you're right. There was one main driver. It was that Top line developed much better in November December than what we expected. Sales went up in November December Around 11%. We didn't foresee that for various reasons. That is the reason why we are And also a substantially higher EBITDA margin in Q4, driven by the operating leverage of this volume growth in November in December. Okay, great. Then my second question is, you mentioned the introduction of a new Innovation which should benefit the installers in 2021, but I didn't get it really. What is this exactly? It is a new supply piping system. So it's for drinking water, basically in buildings. It's a complete new system. It's based again on a pressing technology, but we have substantial advantages for installers. It's easier to install, it's safer to install, We are forced to install and have the sell advantages. We will comment that Present this new system at our full year conference in March, also some pictures and then to get a better flavor. Okay, great. That's it from my side. Thank you. Thank you. The next question is from Patrick Lopez, UBS. Your line is now open. Please go ahead. Thank you, and good morning, everyone. Three questions, please. The first would be with Q3 you gave us You provided us with a comment around the order books at German installers. I believe it was around 12 weeks. And where does this stand now going into 2021? And the second question is On the pull forward effects, you mentioned, especially U. K. And And Russia, any chance you can give us an estimate for the margin to the fab? And then lastly, question number 3. You explained in detail the marketing Expenses and general expense effects, can you give us a guidance on how, in terms of timing, How this will ramp up again throughout 2021. I would assume travel expenses will remain low throughout the Q1 at least Before we start creeping up again, maybe same for marketing, I'm not sure about digital investments. Any help on that would be super great. Thank you. First question, order backlog of turbine dollars, we don't have new innovations. It's still 12.11 weeks coming from October last year. 2nd question, We are not able to quantify the pull forward effect driven by the extraordinary price increases in the UK and Russia As of January, it has strong growth obviously in these two markets, but we can't really quantify. Number 3, Timing of SG and A cost this year. For travel, you're right. At the moment, we are Still outstanding travel expenses that will obviously depend on the question when we are back to normal business. For marketing, as I said before, we shift substantially our marketing activity to digital And the digital activities will start already in the Q1. The Geberit Innovation Day, which I mentioned before, Which will be, by the way, a replacement also for the ISH, our important fair in our industry, which will not take place this year in March. These activities will start already in the Q1. Therefore, at the moment, we expect that marketing expense should be relatively equally distributed over the 4 quarters this year. Thank you. Very helpful. Thank you. You're welcome. The next question is from Martin Frisiger, Kepler Cheuvreux. Your line is now open. Please go ahead. Yes. Good morning, gentlemen. Happy New Year from my side. Thanks for taking my question. First one is on AquaClean. Sounds to me like the shower toilet business was up double digit in Q4. Am I right in my assumption? And Has anything changed with respect to the targets for AquaClean in 2021? That's my first question. I'll take one at a time. Yes. Chow orders were up double digit in the Q4. And no, we don't change our So that means double digit also for the 2021? Correct. Thanks. That's helpful. And secondly, regarding the search process for the succession of Roland Ehrlich, I was just wondering Whether this is whether your focus is more on an internal candidate or whether you're looking for external and new people, What are your thoughts here that would be helpful? Thanks. Very simple. Our focus is on the best candidate, Feeding strongly or in German. Okay, great. Thanks. And the next question is from Christian Koch, HSBC. Your line is now open. Please go ahead. Thank you very much. Good morning and all the best for 2021 and congratulations on these strong numbers. I have two questions, please. The first one is about new product releases. You talked a little bit about the supply piping system, but is there also something More for, let's say, the front of the wall, like new products in the ceramics business or anything Like a design update for existing products. The second question is about the diverging development of the product groups. So when we look at the half year results, by then, the Piping Systems business was the one that performed best. And in the second half Of 2020, we saw a significant outperformance of installation and flushing systems as well as bathroom systems. Now the trend that we saw in Q3 accelerated in Q4, it seems. And I just wanted to ask you where that comes from. So did you Do you think there was more renovation work done than new construction, for example, or was there any other expansion? Thank you very much. First question, we have also new product launches in the area of bathroom systems this year. Let me just mention 2 of them. One is we will extend our Geberit ONE offering. This new bathroom system We introduced 2 years ago, 2021 will be Phase 2 with an extended offering Around Geberit 1. And the second example, in front of the wall, we will also introduce A new improved technology around the ring free toilets. You're aware of the ring free toilet technology. We have Additional or have further improved this technology and will introduce corresponding toilets this year. 2nd question, the difference between Piping Systems versus installation, and flushing systems and bathroom systems. In the second half of the year, the driver for that is that the newbuild business and project business has weakened Piping Systems have a higher exposure to newbuilds and also project business. That's the reason why they The next question is from Arnaud Lehmann, Bank of America. Your line is now open. Please go ahead. Thank you very much. Good morning, gentlemen. Two questions on my side. So you achieved your guide for 31% EBITDA margin for 2020, a very impressive performance. I think you haven't been there since the Fanitec acquisition a few years back. And you've been very helpful highlighting the moving parts in the cost base, including marketing, digitalization, etcetera. On this basis, I guess the message is that the cost base to some extent will increase in 2021, including also the raw materials. Are you planning Any, let's say, cost cutting initiatives or productivity gains for 2021 to try to compensate For the increase in some of the cost items and try to defend the kind of 30 plus EBITDA margin. That's my first question. And secondly, at this stage, I appreciate it's early days, but are you able to give us any indication on where you expect the net debt to now end at the end of 2020. Thank you. We do definitely not plan To cut costs this year, but of course, as usual, we have many projects in the pipeline To improve our productivity as part of our continuous improvement program. So we expect also 2021 To improve our efficiency in the various areas, especially, of course, the operation, meaning plans for logistics. And the second question, I didn't acoustically understand. Can you repeat the question? Yes. The question was whether you can indicate to us already where you expect the net debt of Geberit to be at the end of 2020, please? We do not provide any further guidance that mentioned in the call. So we do also not give any guidance on net debt levels. Thank you very much. The next question is from Charlie Fembark, AWP. Your line is now open. Please go ahead. Good morning, gentlemen. After the supporting effect of the value added Tax in Germany in Q4 falls apart in Q1. Is the assumption wrong that sales in Germany at least should be Lower in Q1 than in Q4. Maybe you can tell us at least, please. Thank you. Obviously, the VAT reduction ending end of last year had a positive effect On sales in Q4, but I don't want to make any statement because I don't know If this effect is so big that we will see sales being lower in Q1 compared to Q4. So there is an effect, But no one knows and I don't know how to quantify this effect. Therefore, I can't give you a precise answer. Okay. Thank you. And maybe a second question, just from my understanding. Did you say that the profit level of 31% It's not sustainable because of the raising marketing costs in the first time, I guess. Yes, exactly. Because we have just Being restricted by COVID-nineteen in marketing, but also in traveling, of course, and if we would have had the opportunity to spend the $25,000,000 marketing, We will have spent it last year. You have started, yes. Okay. Thank you very much. You're welcome. And the next question is from John Riveau, Reuters. Your line is now open. Please go ahead. I'm afraid we can't hear you at the moment. Perhaps you're still on mute. Good morning. Can you hear me now? It's very far away. It's very, very quiet. Volume is very low. Could you hear me now? Is that better? Yes, please go ahead. Sorry about that. Yes, good morning, gentlemen, and thanks for taking my call. Just my question, sorry. Just a quick question. On currencies, I saw a lot In local currency, sales went up, but in reported currencies, sales went down. So it's back to the story of the strong Swiss franc again. I wondered, could you give us a bit what's your thoughts on the current situation? I mean, how much of a headache is the Swiss franc And secondly, how does it affect profitability at the company? And linked to this, are there any kind of What plans are there to kind of counter this? I mean, you said there's no further price increases in addition to your normal one in April. Is there anything else you can do to deal with it? Thank you. The currency development is not really a headache For Geberit, because we have almost perfect natural hedge, Which means that currency devaluations or change do not have a material impact on our EBITDA margin. The only headache which could come up It's that we would be forced in terms of sales prices to adjust our price sets, for example, in Switzerland. But the development at the moment and also development last year of the euro versus the Swiss francs did not trigger any Maybe one answer is What is very important to us, Emil, that constantly, long term, we always try to balance our currencies. In many of our projects, we always ask the question, does it support our natural currency hedge? And we do that on the long term. And if that currencies come down like last year, we benefit from this long term strategy and thinking. Right. But what could explain the situation of why would you be forced to adjust prices in Switzerland? Would you Have you had to cut prices in Switzerland to prevent people going to Germany? Or what's the mechanics If you had to do that, but you obviously haven't, but what's the mechanics that could explain? Very simple, very simple. If currency driven, cross border business Would go up substantially, we would consider or think about price adjustments, for example, etcetera. But that is not the case at the moment. Okay. And I'm saying there's no price increases planned for the Eurozone and to tackle the Swiss francs strength at the present or in the U. S. Because of the dollar decreasing in value substantially? So we did 2, as I mentioned before, in the UK because of the devaluation of the pound and in Russia because of the strong devaluation last year also. Nothing planned in addition in Europe, Eurozone or U. S? And the next question is from Christian Arnold, Stephen. Your line is now open. Please go ahead. Yes. Good morning, gentlemen. Thank you for taking my question. First of all, a clarification. You said before that in November December, you achieved a growth of 11 After a weaker October, this 11%. Were you referring to Germany or to the whole group? No, there was a whole group. There was a whole group. Yes. Then on Germany, I mean, this tremendous Q4 Organic growth of 13%. I mean, you stated a different reason. I wonder if you can give us a comment On the inventory levels at wholesalers, compared to maybe 3 months ago compared to 1 year ago, where do we stand here at the inventory levels for Germany, especially, but maybe in general as well? In general, we believe actually we do not know, but we believe that inventory levels at the end of the year Has been rather high at wholesaler level, especially also in Germany. In Germany, due to the VAT effect, But also by the general behavior of wholesalers in the 2nd pandemic wave, which was different to the 1st pandemic wave. In the 1st pandemic wave, especially in April May, wholesalers in general reduced their inventory levels. And it seems that in the 2nd pandemic wave, although the construction industry has not been impacted by any large restrictions, Wholesalers didn't want to make, let's say, a mistake again and increase inventory levels, definitely for the year from 1 or 2 customers. Any guess what does it mean for Q1? Again, the same answer as I gave before to Charlie Federerbach. And obviously, it's not helpful or not helpful in the sense that if that is true, That will have some negative impact on Q1. But interesting question, obviously, what is the amount, the quantification, we do not know. Okay. Next question I have is on the supply chain. Is there any interruption you see, Any shortage of electronic components, maybe for shower, toilet, etcetera? No, at the moment. We do not have any interruption in the supply chain, but it has become very challenging, especially in terms of transportation. So some of the components which we source, especially for shower toilets from Asia, it's not that they are not available. The big challenge at the moment is to find logistic capacity containers to ship these products from Asia to Europe. Prices for containers shipping containers went up dramatically over the last couple of weeks. But at the moment, we have All the products we need, but the situation is challenging. Thank you. You're welcome. The next question is from Ceta Ekstrom, Morgan Stanley. Your line is now open. Please go ahead. Thanks very much. Hi, gentlemen. One question from me. Geberit's strong relationships with your wholesalers and train installers is Key to the market position and raising growth potential of the business. You're speaking about increasing your digital marketing presence going forward, which is obviously a bit of a shift from the in person relationship that you've had. Do you think that this can present a bit of risk So actually we think that is an opportunity. If I look at last year, we have been able to increase our contact with customers despite the crisis. Overall, our customer context, mainly with installers, went up by 9% last year. And that was driven by a shift to much more digital interactions. We tripled the number of digital interactions last year with our customers. And they make around 40% of our interactions on our digital has been digital last year. Our second element, which also gives me confidence that we are able to Keep or even strengthen our customer relations. And this year, with all the restrictions we have, we increased substantially our number of customer trainings last Actually, we did more customer trainings last year than the year before, substantially more because it shifted to digital Online training of customers. We trained last year just as one number, we trained 50,000 customers We're teaching on training to last year. Great. That's helpful. Thanks very much. Welcome. The next question is from Marta Bostka, Berenberg. Your line is now open. Please go ahead. Hello, good morning. Thank you for taking my question. I have couple started 1 by 1. I was just wondering if you could give us a little bit more detail on when do you base your statement of the market share gains, Especially that you, at the same time, do not really want to quantify those One off effect with regard to the ATV impacts, to the pricing impacts, to the pre buying impacts, and you don't give us any outlook either. So In this context of the extreme lack of visibility, as it seems, I would like to know a little bit more on what Are you actually based your confidence that you grew out of the market, please? Very simple. Yes, very simple. We do not believe that The building construction market, especially the sanitary building construction market has been growing last year. That is a simple observation why we believe we have gained market share. And especially if you go company by company And of course, also if you compare where we have competitive figures, we are very confident that we have gained market share. So you think there was no growth in the sanitary heating and air conditioning industry at all and the industry Like for instance from Germany, it's just not overlapping 1 to 1 with your market. So what's the reason for the discrepancies? So overall, we do not believe that the market for sanitary products in our geographies where VINIAR exists has been growing last year. Okay. Thank you. And then I would like to ask you about your digital initiatives, which I think it's very cool you are doing it and it's Quite encouraging to see already 40% of your interactions last year was being digitalized. Now I heard From other industry players that they had been planning to launch the virtual showroom Already last year fully digitalized in Europe. Have you seen any such a larger move, but some of your largest competitors In the region, would you think of the change in the dynamics in this space? And I have one more question on I'd also like to comment on competitors and their marketing activities, but I can comment on our own marketing activities. We also shifted fares last year To digital showrooms, we reached a substantial number of customers with digital showrooms, for example, In Germany, where we planned originally to be present at a fair, which we then switched to pure online showroom format, which was very much appreciated by customers. So we did that as well Last year, as I'm confident that this format will also work this year. I mentioned before this Geberit Innovation Day, That will be a kind of a virtual fair for the various professional customer groups we are serving. Okay. Thank you. And then lastly, with regard to your pricing system for the drinking water supply, I mean, that's it has been a very active area Many of your key competitors in there and for most of the products on the market already I've We're being equipped to a fully digital monitoring of the water quality, including like some assistance to probe for the key bacteria and germs in the water in the real time, the dual new piping system has such features. I'm very sorry. Can you rephrase the question? I didn't understand. Yes. I'm asking about the digital monitoring features of your New Piping System for the Drinking Water Supply. So from the competitors, I have seen real time monitoring of the quality of the water in the piping systems launched in the market over the last 3 years. And I'm asking what is in your pricing system in terms of digital features? There we have to be precise. This is on our business. We are selling pipes and our competence and product are for the transportation of water. The water management, for example, monitoring, measuring, cleaning, whatever you want to call it, is not the category where we are at. Okay, that's clear. So I finish it here. Thank you very much and hold on for 2021. Thank you. The next question is from Alessandro Foresi, Octavian. Your line is now open. Please go ahead. Yes, good morning. Thank you for taking my question. I have two questions, Alfred. We spoke a lot about Germany, but not so much about Switzerland. And the growth rate was also very strong. Can you explain that growth rate? I think there were 2 main reasons in Switzerland. One is the before mentioned home improvement trend, Which is also taking place in Switzerland. And secondly, we have seen a very strong nice development of shower toilets in Switzerland Over the last year and as you know, shower toilets is a very important category for our business in Switzerland. So more relevant in Switzerland than in Germany, for instance? I'm sorry, say again. Is that more relevant in Switzerland than in Germany? Share of state, yes. Okay. And is there also a similar read across in Austria? Because that Was not so stellar, but also quite strong and definitely better than expected in Q4 as well. The same statement for us as well, Same drivers. Okay. And then on all these, if you take the energy turn off here, what's your best guess on how Sustainable this growth now is. I mean, we heard about stocking, destocking, DAP and so on. But if you sort of Summarize everything in your brain and you say, okay, of all this you have seen, Yes, it's probably sustainable. Yes, it's already there is something in my brain. But it's not a crystal ball. It's not a crystal ball, in my brain. So there is nothing there, but I don't want to talk about the outlook. As I said during my introduction, We don't really don't want to talk about the outlook. Coming back to Q4, end of October or beginning November when we had our Q3 conference call, We expect that the Q4 will be weak. It was very strong. We have a low visibility. Uncertainties are high. Last year was definitely The year with the highest monthly volatility of Geberit sales, most probably ever. And therefore, we just refrain from talking about The short term future of our business. Fine. Maybe then one last one, we didn't speak about personal cost development. Do you have Any indication on that side? We expect this year an average wage Inflation of around 2% for 2021. Okay. Thank you. You're welcome. And the next question is from Martin Flutiger, Kepler Cheuvreux. Your line is now open. Please go ahead. Yes, thanks. Just a quick clarification question. I'm not sure whether I understood you correctly. So we were talking or you were talking about digitization Cost of €15,000,000 in 2021. If I remember correctly, you already had €15,000,000 in 2020. And then what I didn't understand, did you say that there was going to be on top another EUR 15,000,000 so Incrementally now EUR 15,000,000 versus 2020 for 2021, that's my question. This is correct. It's another EUR 15,000,000 or in other words, Compared to a baseline 2019, it's €30,000,000 more now in 2020. Okay. That's what I understood. Thank you so much. The next question is from Manish Berya from Citiyanathan. Your line is now open. Please go ahead. Yes. So congratulation on very good results today. I'm very surprised at your margin comments Because you are already at 31%, so I understand this is at a high point and there is a headwind next year. But you also commented, I mean, the growth rate in Switzerland, Austria and Germany is also driven by premiumization. So I'm just wondering because you are already at 30%, 31%, and you will benefit because of renovation, some margin benefits from there. So how could your margin not be like more than 30% over the medium term? As I said before, Marketing expenses going up again. While COVID is over, we'll have also another level of travel expenses. As I also mentioned before, another €15,000,000 this year or €30,000,000 compared to pre COVID For digitalization, and don't forget another point, we have reached record low raw material prices last year, actually More or less in summer last year. And raw material prices, as I outlined before briefly, have started to grow again and accelerated In terms of growth, over the last couple of weeks, so take also that into consideration, we have had last year a historical low level of raw material prices. But is it a fair assumption to make if your sour tolet and the premiumization continues that will be margin benefit for the company? The growth of shower toilet does not have a substantial material impact on the margins And the next question is from Dan Hundring, Van Vontobel. Your line is now open. Please go ahead. Yes, good morning, gentlemen. The Nordic region is your 3rd largest market and you achieved an organic growth of 3% in this region last year, Which is good, but it is lower than in your core markets, Germany, Switzerland and Austria. While actually the lockdown in Scandinavia was less severe, The trend towards home improvement is very strong and your market penetration behind the wall is still has room for improvement. So how confident are you that your combined product offering in Scandinavia will result in higher growth going forward in this region in the coming years? Thank you. We are confident because as I've also indicated in my introduction, For us, the important growth line in the Nordics is behind the wall systems and behind the wall flushing systems. And this behind the world Russian systems that Geberit grew almost double digit last year. However, the share of this business is still relatively low. This is also the reason why we have not benefited in the same expense from this crisis in the Nordics compared to our core markets to German speaking countries. We are confident that midterm, we are also able to outperform the markets based on behind the wall systems Ian, the audience. Okay. Thank you, Christian. You're welcome. And the next question is from John Rivel, Rojas. Your line is now open again. Thank you for taking my follow-up. It's just a quick factual question. What was the level of price increases that you did in Russia and Britain in January? Could you tell me, please? I think it's a bit broader than products, but in average around 5% in average in UK, Amazon and Russia. Thank you. You're welcome. Thank you. And the next question is again from Christian Arnold, Stephen. Your line is now open again. Yes, thank you. Question on the product area again. I think in the past Installation and Flushing Systems have the highest margins, a little bit ahead of Hi, Bill Systems and Basel Systems. I wonder, I mean, having all these integration work done with Sanitec, All the brand outpacing done with Sanitec and also the strong growth in bathroom systems coming from Shower toilet. Is it a fair assumption that bathroom systems now has a very similar profitability compared to installation No, it is not the case. The margin is still lower from bathroom systems compared to installation and flushing systems. And we do also not expect that, that will change short or mid term. Okay. Okay. And similar to piping, Yes. Okay. And just a Brief technical question on CapEx. What do you expect for 'twenty one, 'twenty two? 21, we have a budget of around CHF 180,000,000, again higher than last year. We expect last year to be finally at around CHF 150,000,000 Because also in terms of investments, we have been restricted by COVID-nineteen. We wanted to spend more some delays Due to the COVID-nineteen restrictions, this year we plan and hope that we can invest again on a normal level of CHF 180,000,000. And in 2022? We don't know yet. But midterm, we expect around 6% of our net sales to be invested into CapEx. Thank you. Welcome. And this concludes the Q and A session. And I hand back to the speakers for closing remarks. So Thank you for your interest. We wish you all a good day and see or hear you most probably then at our full year conference mid March. Thank you. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.