Good morning. I am the operator for this conference. Welcome to the conference call on the first quarter results 2018. 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. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. This call must not be recorded for publication or broadcast. At this time, I would like to turn the conference over to Mr. Christian Buhl, CEO, accompanied by Mr. Roland Iff, CFO, and Mr. Roman Seiler, Head of Corporate Communications and Investor Relations. Please go ahead, sir.
Thank you for the introduction. Good morning, ladies and gentlemen, and welcome to our conference call. Geberit had a successful start into the year 2018, with strong sales and earnings growth in the first quarter. We generated a sales growth of 11.7% to CHF 823 million in the first quarter. In local currency, sales grew by 4.7%. The adjusted operating cash flow grew by 12.1% to CHF 245 million, corresponding to an EBTA margin of 29.8%. Net income, adjusted for one-off costs related to the Sanitec acquisition, increased by 12.9% to CHF 183 million, corresponding to an adjusted net income margin of 22.2%, which is 20 basis points higher than in the previous year. Adjusted earnings per share increased by 13.4% and reached CHF 5.
Let me now first comment on the sales development and also remind you that it is not our policy to communicate with Q1 results our sales figures by individual markets. The group's first quarter sales amounted to CHF 823 million, an increase of 11.7% in Swiss francs. A favorable currency development led to a sales increase of CHF 51 million, or 7.0% versus previous year's quarter. The sales growth rate in local currencies reached 4.7%. Sales in Europe increased by 4.2%, with positive growth rates in all countries and subregions, with the exception of the U.K. and the Nordics. In Far East, Pacific sales were up by 30.1%, with strong double-digit growth rates in all key regions. The Middle East/Africa region, sales grew by 2.8%, with positive growth rates in the Gulf region and South Africa. In North America, sales grew by 3.1%.
I will now comment on the sales development per product area, again in local currency. Please keep in mind that we have adjusted the reporting structure as of this year due to the completed integration of the Sanitec organization. The product area of Installation and Flushing Systems, with a share of 39% of Geberit sales, grew by 6.5%. Bathroom Systems, reflecting 32% of group sales, grew by 3.4% in the first quarter, and Piping Systems, contributing 29% to total sales, grew by 4.0%. Now let me update you on the operating and financial results. Due to the completion of the major path of the Sanitec acquisition, we will not report any longer one-time costs and corresponding adjustments on EBTA level. We will only report adjusted figures on EBIT and net income level and for earnings per share due to the last year of amortization costs for intangibles.
Now to the results. Geberit EBTA reached CHF 245 million, corresponding to an increase of 12.1% versus the adjusted EBTA of Q1 2017. The EBTA margin as a percentage of sales reached 29.8%, which is 10 basis points above the adjusted margin of Q1 of last year. The EBTA margin was negatively affected mainly by two factors: substantially higher raw material prices, and secondly, higher personnel tariff costs. These negative effects on the EBTA margin have been fully compensated, mainly by the following three levers. First, higher sales prices, fully compensating the higher raw material prices, leading to a zero net price effect. Second, the operating leverage from volume growth. Thirdly, efficiency improvement, especially the full benefit from the site closures in France.
The substantial currency fluctuations did not have any impact on the operating margin due to our nearly perfect natural currency hedge. The adjusted operating profit increased by 12.7% to CHF 215 million, corresponding to an adjusted EBIT margin of 26.1%, 20 basis points above Q1 2017. Adjusted net income increased by 12.9% to CHF 183 million, and adjusted earnings per share grew slightly disproportionately by 13.4% to CHF 5.00. One-off costs related to the amortization of intangibles in relation to the Sanitec acquisition amounted to CHF 9 million on EBIT level, and CHF 7 million on net income level. Driven by the strong results, the group balance sheet has further strengthened. The equity ratio grew again above 50% and reached 51.8% versus 49.1% at the end of last year.
We further continued our share buyback program, started in Q2 last year, and repurchased another 31,000 shares in the first quarter. In total, we have now repurchased around 236,000 shares per end of Q1 2018. Let me now comment on our market outlook for 2018. The various market outlooks for the construction sector have been presented and commented on with the release of our full year results 2017 in March. Since then, our review has not changed significantly. In Europe, we expect overall a favorable but mixed construction market environment. Meanwhile, individual markets will continue to develop differently. We remain confident about the construction demand in Germany, although the limited qualified installation capacity might remain a bottleneck for growth. In Switzerland, we expect a stable market running on a high level. In the Nordic region, we expect a mixed picture.
While we are positive for the building construction industry in Denmark and Finland, we expect a further cool-down of the market in Sweden and Norway. In Italy, we foresee an improving market environment. Favorable building statistics indicate to a growing construction market in France. Despite a robust residential market in the U.K., we expect overall a declining market environment in the U.K. due to a weak non-residential sector. In Austria, we expect again a growing construction market, but at a slower pace compared to last year. We are positive for Benelux, although the recovery in the Netherlands leads to shortages of qualified installation capacity. The outlook for the Eastern European markets remains mixed, with a positive outlook for markets like Poland and stabilization of the market in Russia. Finally, in Spain, we expect an ongoing recovery of the building construction sector.
In North America, we foresee a moderate improvement of the institutional construction market, while both relevant segments for Geberit, the healthcare and the educational sector, should contribute to growth. The residential construction sector should also do well and further grow in 2018. In Far East Pacific, we see a mixed picture across the region. We expect a moderate increase of the residential construction market in China. In India, we are more cautious for the residential construction sector due to new regulations and policies introduced last year. In Australia, we expect overall a stagnating building construction market. Let me finalize our market outlook 2018 with the Middle East and Africa region. We expect an improving construction market in the Gulf and a stagnating building construction environment in South Africa. We remain cautious for the Northern Africa and Near East region with a mixed picture.
Now a few words about the raw material price environment. Average raw material prices in the second quarter will be above the level of the second quarter last year, driven by the already increased price level and a further price increase in the second quarter compared to the first quarter this year. Finally, let me briefly update you on the Geberit outlook 2018. We expect for the full year total CapEx of CHF 170 million. Important investment projects this year will be the complete renewal of our metal Piping Systems manufacturing site in Germany and the capacity expansion for the manufacturing of our Installation and Flushing Systems in various sites in Germany and Switzerland. Another important topic this year will be the preparation of the phase-out of four ceramic brands and the replacement by the Geberit brand, as already announced with our full-year results in March.
As a consequence of this phase-out, we will amortize the book value of these brands, leading to additional yearly amortization costs of approximately CHF 8 million. This amortization starts this year and will run up to 12 years. As usual, we will provide a quantitative sales and EBITDA margin guidance for 2018 with our half-year results in August. Keep in mind that we will face in the remaining year a stronger tariff increase than in previous years and additional personnel costs for the buildup of production capacity for Installation Systems due to the strong growth of this product line. This is the end of our introduction. We are now ready to answer your questions.
Thank you. We will now begin our question and answer session. If you have a question for our speaker, please dial zero one on your telephone keypad now to enter the queue. Once your name is announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial zero two to cancel your question. If you are using equipment today, please lift the handset before making your selection. One moment please for the first question. We've received the first question. It comes from Andre Kukhnin of Credit Suisse. Go ahead, your line is now open.
It seems that it doesn't work. This is Christian Buhl speaking.
Mr. Flüttiger, you can ask your question now. Your line is now open.
Okay. Thanks so much. Good morning, gentlemen. Martin Flüttiger from Baader Helvea. Three areas for questions, please. I appreciate you don't want to talk about country specific growth rates, but you've indicated at the Q4 reporting stage that there was a pre-buying effect in Switzerland, most likely also for Q1. Was that the case and could you talk about the magnitude that you think is appropriate for that? That's my first question on Switzerland. The second one is on the order book level at sanitary installs in Germany in Q1. Do you have any updated figures for that? I seem to remember that it was 10.3 weeks last time you spoke about it. My third question would be on the net price effect in Q1, which was flat. Could you give a little bit of insight on what the individual components, i.e.
selling price increases, but also raw material price increases were in Q1 and how these were offsetting one another? Also talk a little bit about the raw material price increase in Q1 and the quantitative indication, and also provide some quantitative guidance for Q2. That would be my third question. I'll go back in line for the rest. Thanks.
Thank you for your question. Pre-buying effect in Switzerland in the first quarter. Yes, we had pre-buying effect in Switzerland in the first quarter, although we had the first pre-buying effects at the end of last year. These pre-buying effects in Switzerland this year were higher than in previous years due to the higher price increase, which we have implemented as of April 1 this year. The second question, Germany, the order book of sanitary installers. The latest statistics indicate that the order book of sanitary installers in Germany has further increased. Currently, it stands at 12.9 weeks. That is from the spring survey, which is an increase of 13% compared to last spring. The bottleneck remains in Germany. The order book level of installers remains to be on a high level. Number three, the net price effect of the first quarter.
We have seen raw material price increases of 2.5% in the first quarter versus the first quarter last year. We have compensated this 2.5% raw material price increase by a sales price increase of around 1% in the first quarter. Let me briefly come back to the first question of the pre-buying effect in Switzerland. This higher pre-buying effect in Switzerland compared to previous years led also to a relatively weak sales in April. Of course, the pre-buying fills the inventory levels of wholesalers and led to relatively weak sales in April.
Thank you very much.
You're welcome.
Thank you. The next question is from Revill of Reuters. Please go ahead. Your line is now open.
Yes, good morning. I'm quite interested. Can you hear me?
Yes, we can.
Yeah. Super. Yeah, okay. Yeah, good morning, gentlemen. Yeah, I'm just interested in your outlook on raw material price rises moving forward. You say about metals raw materials, you expect those to rise. Which metals are we talking about here in the first one, steel or aluminum? What sort of price rises do you expect moving forward in Q2 and beyond that? Secondly, how much of this is down to U.S. sanctions, do you think, on Rusal or just the general U.S. metal sanctions that are coming out there? Thank you very much.
Thank you for the question. We expect further increase of raw material prices for plastic raw materials and metals, both of them in the second quarter compared to the first quarter this year. If we talk about metals, it's mainly metals which are linked to aluminum, copper, nickel, and zinc.
Right. Okay.
The main metals where we are exposed to.
Right.
To your third question, we have not seen any impact so far from the U.S. sanctions or from Rusal on our prices and raw material price, purchase prices in the first quarter. We haven't seen any impact so far.
On the U.S. sanctions on Russia there's been no impact, right. Okay. Is there a figure for how much you expect metal prices to go up in the second quarter, we can say?
I would say compared to last year, in the first half of the year, we expect an increase which is lower compared to the first half year last year. If you look, for example, at the spot prices of aluminum, copper, nickel, zinc, they are year-to-date, up in the single digits.
Last year, aluminum, copper, nickel, et cetera, they went up between 25% and 30%. We expect a further increase, but at a lower extent compared to last year in the first half of the year.
It's sort of single digit range into the second quarter as well then, year-on-year?
Yes.
Thank you.
Yes.
Thank you. We now have Andre Kukhnin line. Please go ahead. The line is now open.
Good morning. Can you hear me?
Yes.
Yes, we can hear you.
Great. Apologies about earlier. Can I just start with the labor costs that you saw in Q1 2018, that was unexpectedly higher and quite a step up from the run rate of quarters of 2017. Is this just the inflation as we're seeing elsewhere, or was there anything else in that 195 figure?
In Q1 we also record the cost for our employee participation programs. That's why Q1 is always a little bit higher than Q4. In addition, the last quarter of the year is also an important holiday month. That's why the labor cost in Q4 is always a little bit lower than the run rate.
Right. It was also, I think good sort of 7.5, 7.6% up year-on-year. I don't think that was the trend in the previous year.
You have also an important FX impact in there. The FX is driving the position obviously also quite importantly. We expect higher labor increases or tariff increases throughout the year, in the area of 2.5% than for the whole of 2018, which is a little bit more than what we had last year.
Okay. We should take CHF 195 and think about that as more of a run rate through quarters for 2018 and maybe attach less in Q4.
We'll give the guidance with the mid-year numbers.
Okay. On net price, on the Swiss price increase, is that still planned as before at 3%?
Correct. No changes there. We implemented a disproportional price increase of 3% as of April 1st this year in Switzerland.
Great. Yes, indeed, on 1st April. Can I ask, just double check on the German installers. I heard what you said about the spring survey, and the lead times. Your language changed from kind of severe constraints to might constrain. Is there anything to read into this? Are there any signs of this easing? Why did you change that language?
It is indeed that we think at a certain point in time it should change a bit and it should help that installers add capacity. We haven't seen it, but at a certain point in time, it should come, and that is the reason why we've changed the language slightly. We haven't seen it so far.
Right. If I may, we're of the same view, and I've asked that question pretty much every quarter, if not in every other quarter, that it should change and economic forces should prevail. Your answer was always, we're seeing none of that on the horizon. It sounds like you are seeing something on the horizon. I don't want to push too far on this, but just generally interested because you clearly monitor a lot more things and you see more things than we can see from here.
It's not on the horizon, but it's the horizon itself. That is the reason. No figures on the horizon. There should be a horizon.
Right. Great. Thanks very much. Just the last one. You obviously made a big announcement at the end of last year on the brand structure intentions in Europe and in particular, the big one in Germany with Keramag. Could you share any kind of initial reactions you had from customers or other stakeholders from installers and wholesalers, if you can?
In general, we have positive reactions from the wholesalers. Maybe even less surprises than what we would have expected. We had even some customers who expected that decision because they understand the logic why we do that. They understand the simplification not only for Geberit, but also the simplification for the market, for our customers, for our partners. All in all, a positive reaction.
Very clear. Thank you very much.
Welcome.
Thank you. The next question is from Martin Hüsler of Zürcher Kantonalbank. Please go ahead. Your line is now open.
Yes. Thank you. I have two questions. First of all, the amortization of the book value for this brand phase out. Can you repeat again? CHF 8 million per year we should add to amortization for 12 years. My question is, why do not you impair this in one step? The second question related to this, is there already a CHF 2 million impact in the first quarter on amortization? This is the first topic I would like to speak. The other one is relating two working days. According to my calculations, you had about a negative impact of 2%, one or two working days less in the first quarter compared to last year. Is this correct? For the second quarter, I would assume a positive impact by two working days, i.e., about 2% sales impact on positive territory. Is this a fair assumption?
I start with question number 2, going to give the answer to question number 1. You are right, we had a missing working day less in Q1 this year. There was one working day. In the second quarter, some of the countries will have an additional working day. Not all of them, for example, Switzerland. The second quarter, you can assume a positive effect maybe of half a working day, not more than that. Does that answer your question?
Okay. Yes. Thank you.
Related to this brand amortization, the reason why we do not impair it in one step is that we will still use the brand or need the brand for spare parts, for example, which are in the market. We also have an interest in protecting those brands for a certain number of years. That is why we are not impairing it, that is why we are amortizing it. Yes, we have already charged CHF 2 million now in the first quarter.
Okay. Would you consider this as adjusting, or will you present adjusted EBIT figure for that, or is this for you ordinary impact on EBIT?
No, this is an ordinary cost. The only thing we adjusted was the amortization of the ceramic production know-how, as we have done it in that line already in the past years. No adjustment for that going forward. Also not in 2018.
Okay. Thank you.
Thank you. The next question is from Charlie Fehrenbach of awp Finanznachrichten AG. Please go ahead, your line is now open.
Do you expect any possible negative implications through the trade dispute between U.S. and Europe and, or maybe possible customs from Europe to Switzerland? Thank you.
Not sure if I fully understood your question. I think it was around if we expect any negative impact from the trade disputes between the U.S. and Europe. If that is the question, no, we don't think that we are affected by the trade disputes, definitely not on the short term. Our operations which we have in the U.S. and our sales organization in U.S. is basically manufactured or selling products which are manufactured also in the U.S. We have a relatively limited product flow between the U.S. and Europe, we do not expect any negative impact.
Okay. Thank you. The next question is from Fabian Hecky of UBS. Please go ahead, your line is now open.
Yes. Good morning. My first question, when you take the Bathroom Systems growth of 3.4% and now with the new business unit structure, when we look at last year, the ceramics business was slightly down. Now, the new structure has gained some traction, which is mainly due to the shower toilet, or can you give some indication how the ceramics ex shower toilet and ex the fittings business, how that performs?
Both business performed well. We are in line with our expectations in terms of the development of the ceramics business, and also shower toilets had a very good first quarter. We were in line with our expectations of a double-digit growth, and both of them contributed to the growth of Bathroom Systems.
A second question on your kind of combined product you're planning with the ceramics or the in front of the wall and the behind of the wall systems. Can you elaborate on this, how you want to combine the know-how or some technicalities on how that should work and what should be the benefit for the installers and the consumers?
There are many areas I could talk about in that context, basically what we do, we want to combine the technical know-how, the engineering know-how, with the ceramics design know-how to improve or to bring benefits to both professional customers, for example, an easier installation of bathroom ceramics, but also the same way, more benefits for end users, not only design, for example, some functionalities which are then driven by technical features behind or at the wall. I can't go into more details because that is an area of high concern and confidentiality for us. We are working on these topics, and we expect that we will bring, as of next year, first products to the market, which are based on this combination of know-how and the design of ceramics in front of the wall.
Okay. Are the wholesalers and plumbers already informed about the steps and how do they react about potentially increasing market power of Geberit? Are they concerned about that strategic direction?
If you refer to new product innovations, they are not yet informed. We do that in the regular course of the year. They will be informed at the end of this year or beginning next year about the new product introduction. Therefore, they are not yet informed about the concrete innovation ideas we are working on.
Okay. Thank you.
Thank you. The next question is from Bernd Pomrehn of Bank Vontobel AG. Please go ahead, your line is now open.
Yes. Thank you, and good morning, gentlemen. Three questions if I may, please. Firstly, is it correct that you saw a significant pre-buying effect only in Switzerland and no other countries? Or what should we have in mind when we do our estimates for the next one to two quarters? Secondly, is it true that your expectations for Italy have slightly improved? I realized that you changed your wording slightly, so far you guided for a slightly improving environment in Italy. Now you're speaking about an improving environment in Italy. Finally, how do you see the market acceptance for your new AquaClean Tuma Classic series? Will this further help you to improve penetration rates for shower toilets, or how do you see the risk of cannibalization of your higher price points?
Coming to the first question, the pre-buying effects were mainly in Switzerland due to the disproportionate price increase in Switzerland. That is not the only impact which we have now seen on the second quarter. What we have seen at the beginning of the second quarter or in April, relatively weak sales, because we have seen that the weather impact in Europe, of the cold weather end of February, beginning of March, led to low order income and sales in April. That was a clear impact now on the second quarter. Question number two, you're right. We are a little bit more positive for Italy. We expect now an improving market environment than we have been a little bit more pessimistic at the beginning of the year. Question number three, the acceptance of our new shower toilet, AquaClean Tuma Classic.
That is too early, to be honest, because we introduced the product at the first of April. That's just too early to talk about the success. The first acceptance by our professional customers, wholesale showrooms, is very positive, but it's not yet the time to talk about the acceptance at the end consumer level.
Okay. Thank you, Christian.
You're welcome.
Thank you. The next question is from Martin Flüttiger of Kepler Cheuvreux. Please go ahead, your line is now open.
Thanks, gentlemen, for taking my follow-up question. Just coming back to this issue of selling and raw material price increases. Now, looks like selling price increases, the ordinary ones plus the extraordinary one. Well, mind you, the extraordinary one in Switzerland is only as of Q2. The ordinary selling price increase is obviously no longer sufficient to cover cost inflation. Looking at other cost effects was minus 60 basis points, then we also had this raw material price impact. When are you guys considering introducing extraordinary selling price increases to cover the impact of rising raw material prices? Because looking at your guidance, it looks like raw material price inflation will continue.
What is your question exactly? Can you repeat your question?
When are you thinking of increasing selling prices at an extraordinary level, due to the high raw material prices? Because now, cost inflation is not covered by selling price increases.
No. We do not plan any extraordinary price increases because in the last quarter, but also already in the fourth quarter 2017, we compensated the higher raw material prices with our regular sales price increases.
Okay, thanks.
You're welcome.
Thank you. We have the next question. It's a follow-up question of John Revill of Reuters. Please go ahead, your line is now open.
Yeah. Hi. Thanks for taking my follow-up. It was just a question. Obviously, you said that you see no price increases from Rusal, the sanctions on Rusal in the first quarter. I realized, obviously, the sanctions have only come in in the second quarter. Looking ahead, what sort of effect do you see? Do you see any effect on Rusal or aluminum prices in the second quarter as a result of the sanctions? Secondly, on the U.S. tariffs overall, just clarification, moving forward, the tariffs in the second quarter, is that going to have any effect at all, or just the general metals tariffs that they've brought in over there? Just a bit of clarification on that'd be nice. Thank you.
It's important to know that our exposure to aluminum is relatively limited.
Okay.
First of all, we are not buying aluminum at all. We are buying parts made out of aluminum.
Okay.
There's a value add in between. Therefore, even if there is an impact on the spot price of aluminum, the effect would be much lower on Geberit. If you look at the aluminum spot price, it's more or less on the level where it has been at the beginning of the year. We don't even see an impact currently on the spot price of aluminum.
You don't see any impact as a result of Rusal moving forward then? You don't see in the future then, particularly?
Sorry, say again?
You don't see an impact on the aluminum prices because of the Rusal sanctions particularly then?
I just look at the aluminum spot prices, and they came down again, and they're at the level of the beginning of the year.
Okay. Good stuff. The general U.S. metal tariffs, have they had any effect on prices at all? Or you expect them to have moving forward?
No, the reason is the following. In the U.S., we are manufacturing faucets, and the raw materials we are requiring there are neither aluminum nor steel.
Okay.
Therefore, they're not impacted with our U.S. operations by any tariffs, which are then implemented or not, which we don't know.
Right. Okay, good stuff. Moving forward, just to copper bottom it as it were, the Rusal thing, you see no particular impact on aluminum prices moving forward then. That's correct?
As I said before.
Yeah. Good. Excellent. Thank you.
You're welcome.
Thank you. The next question is from Manish Poddar. Please go ahead, your line is now open.
Good morning. I have two questions. First is on your gross margin. If I calculate your gross margin, I see that in this quarter it has contracted by 120 basis points. In your presentation, you say that the net price effect is zero. My question is, how do you reconcile these two numbers? This is my first question. The second one is that we were of the impression that the CHF depreciation actually brings in some margin accretion as there are more costs in CHF rather than the revenue versus the group. Now you are saying that there will be no margin application from here on. My question is something fundamentally changed on this FX equation? That's all my two questions.
Question number one, the 120 basis points higher cost of materials and potential sales, Q1 2018 versus Q1 2017, was driven, one, by the raw material price increase, also by a product mix effect. These two factors are explaining the 120 additional basis points. Also the currency effect because we are buying a higher share of our raw materials in EUR versus our sales. Three effects, increasing raw material prices, the product mix effect, and the FX effect. Can you repeat question number two, please?
We were of the impression that the CHF depreciation actually brings in some margin accretion for the group because there are simply more costs in Switzerland than the revenue versus the group. These have changed. You are now saying that there will be no margin increment because of the CHF depreciation from now on. Just want to understand, has something fundamentally changed on this FX equation?
We have even improved our natural hedge with the acquisition of Sanitec, and that is now visible in the group. In the first quarter this year, we had a zero impact on the margin from all these currency fluctuations. We have even proved a better natural currency effect. It's a nearly perfect natural currency effect hedge.
Okay. Yes. Can I just ask one more question, basically, related to the first question. How do you calculate this net price effect? If I take your last year revenue of CHF 737, maybe the cost of material of CHF 203 million and just multiply by 2.5%, that is the raw material price increase. And then maybe take 1% sales increase and multiply with the CHF 800 million or something like that. That's the way you calculate the net price impact?
It is the.
There are a lot of elements there, like currency.
Basically, what we do is we take the raw materials price effect, which was 2.5% in the first quarter up, and then we add the price effect from sales price increases, which was 1% in the first quarter, and this equation leads to the zero net price effect in the first quarter.
I understand that. Yeah. Thanks a lot for your answer.
You're welcome.
Thank you. We have a next follow-up question of Martin Hüsler of Zürcher Kantonalbank. Please go ahead. Your line is open.
Yes. Thank you. It's just an additional question for me because I struggle a bit to see the tariff increases in your personnel costs. If I take the change in cost of this 7.6% in the first quarter, I think you added about 1.4% in number of personnel. This then gives a difference of, let's say 6%. I assume that you have a FX impact in the personnel cost of about the range of 6%-7%. I was just wondering how I can see or calculate the tariff or the increase in personnel costs then.
We have tariff increases if we compare to the previous year of around 2%. They will increase towards year-end a little more because, for example, in Switzerland, we increase the tariffs in Q2 or as of 1st of April. We have the FX impact, as you mentioned, and on the other side, we have the savings from the closure of the French plant. We invest obviously in capacity. Out of those four effects, you have the +7.6 versus prior year first quarter. If you compare towards the fourth quarter last year, you do not have a currency impact that is roughly neutral. Q4 is always a little bit lower due to holiday, et cetera. In Q1, we book our cost for the employee participation programs, which were a little bit lower this year than they were last year.
Okay. That helps. Thank you.
Thank you. There is a next question from Andre Kukhnin of Credit Suisse. Please go ahead. Your line is now open.
Yes, thanks very much for taking the follow-ups. The first one was actually on exactly what you just discussed. You had the full benefit from the French site closures in Q1 already. Given it is all now done, maybe you could help quantify that. We kind of have it at about CHF 3 million-CHF 4 million. Would that be a right ballpark?
As usual, you're not quantifying that impact, but we have the full impact in Q1 and already in Q4 last year.
For your full year considerations 2018, keep in mind that we have only for three quarters now the full impact of the site closure in France, because Q4 already last year we had a full impact.
Got it. Thank you. Second follow-up is on the answer you gave about the new products you're planning to introduce, where you said you will combine the technical engineering know-how behind the wall systems with ceramic design know-how. Could you just repeat what you said in terms of the benefits, what that product would be geared to do?
There will be several benefits. For the professional, it will be a faster and easier, safer installation. For the end user in front of the wall, it will not be only design, it will be a lot around functionalities for end users. I don't want to go into more detail here.
No, I understand. I just wanted to confirm the faster and easy install, as well as user benefits. Thanks very much.
You're welcome.
Thank you. The next question is from Bernd Pomrehn of Bank Vontobel AG. Please go ahead. Your line is now open.
It's just another housekeeping question, please. Tax rate was again, quite low in the first quarter. Do you provide any updated guidance for the full year tax rate? Thank you.
Yeah, we take it down to 14% for the full year.
Okay, excellent. Thank you, Roland.
Thank you. As there are no further questions, I would hand back to you, gentlemen.
Thank you very much for the participation and wish you all a great day. Thank you. Goodbye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.