Operating margins at the high level seen in the previous year
Results saw significant double-digit increases at all levels in 2021. Operating cashflow (EBITDA) increased by 15.6% to CHF 1,069 million, which corresponds to an EBITDA margin of 30.9% (previous year 31.0%). The significant increase was largely due to the exceptional volume growth. Raw material prices, which have risen massively since the end of 2020, and the markedly higher energy and freight costs had a negative impact on margins, although this was partially offset by both ordinary and extraordinary price increases. Results were also curtailed by the partial normalisation of marketing costs compared to the previous year. Currency effects had no significant impact on operating margins.
Operating profit (EBIT) grew by 16.9% to CHF 902 million, corresponding to an EBIT margin of 26.1% (previous year 25.8%). The increase in the operating result and an improvement in the financial result led to an increase in net income of 17.7% to CHF 756 million, corresponding to a return on net sales of 21.8% (previous year 21.5%). By comparison, earnings per share saw a disproportionate increase of 18.9% to CHF 21.34 due to the positive impact of the share buyback programme.
Operating expenses under control
All items within operating expenses were slightly affected by negative currency effects. The cost of materials increased by 26.4% to CHF 997 million, representing a significant increase in share of net sales at 28.8%, compared to 26.4% in the previous year. This increase was due to the historic rises seen in the price of the product mix relevant for Geberit – both for plastics and for industrial metals – as a result of the pandemic. Compared to the previous year, the price increase in local currencies was 13.3% or CHF 112 million. Personnel expenses rose by 8.2% to CHF 812 million, which equates to 23.5% of net sales (previous year 25.1%). This increase was due to a – underproportionately low – increase in the number of staff, and tariff-related increases in salaries. Other operating expenses, net increased by 11.6% to CHF 582 million. This was largely due to the volume growth – which had an increased impact on freight and energy costs – and to freight and energy prices, which were significantly higher in general. Marketing and travel expenses, which were lower in the previous year as a result of COVID-19, also again became a factor. Depreciation increased by 5.8% to CHF 134 million, while the amortisation of intangible assets increased to CHF 34 million (previous year CHF 27 million) as a result of impairments connected to two ceramics brands.
The net financial result contracted to CHF -13 million (previous year CHF -17 million) due to lower interest expenses compared to the previous year. Tax expenses grew from CHF 112 million to CHF 133 million due to the significantly higher pre-tax result. This resulted in a tax rate of 14.9% (previous year 14.8%).
Further increase in free cashflow
The higher operating cashflow had a positive impact on free cashflow. In contrast, higher tax payments and a return to higher levels of investment in property, plant and equipment – following a decline as a result of COVID-19 in the previous year – had a negative impact. All in all, free cashflow increased by 12.8% to a new record high of CHF 809 million (see also Financial Statements of the Geberit Group, Notes to the Consolidated Financial Statements, 27. Free Cashflow). The free cashflow margin reached 23.4% (previous year 24.0%). CHF 571 million, or 70.6% of the free cashflow, was distributed to shareholders during the reporting year as part of the dividend payment and the share buyback programme.