Annual Report 2022

Annual Report 2022



Operating margins negatively affected by significantly higher costs

The massive increase in costs as well as currency developments had an extremely negative impact on results on all levels in 2022. Operating cashflow (EBITDA) decreased by 15.0% to CHF 909 million, which corresponds to an EBITDA margin of 26.8% (previous year 30.9%). In the reporting year, the currency-adjusted prices for raw materials and energy rose by 19% and 101%, respectively, compared to the previous year, which resulted in additional costs of CHF 244 million. Due to the multi-level distribution channel seen in the sanitary industry, adjustments to the sales price can only be implemented with a delay, meaning it was not yet possible to fully offset the higher raw material and energy prices in 2022. Tariff-related increases in personnel expenses, additional investments in digitalisation and unfavourable currency developments also had a negative impact on operating margins.

Operating profit (EBIT) fell by 16.3% to CHF 755 million, corresponding to an EBIT margin of 22.3% (previous year 26.1%). The decline in the operating result, a financial result practically in line with the level seen in the previous year and a significantly lower tax rate due to a positive one-off effect led to a less than proportional decrease in net income of 6.5% to CHF 706 million. This corresponds to a return on net sales of 20.8% (previous year 21.8%). The accelerated share buyback programme had a positive effect on earnings per share, which only decreased by 4.0% to CHF 20.48 (previous year CHF 21.34). In local currencies, earnings per share increased by 4.7%.

EBIT, EBITDA, Net income, Earnings per share (EPS)

2022 2021 2020 0 5 10 15 20 25 30 EBIT EBITDA EPS (in CHF million) (EPS: in CHF) Net income 0 200 400 600 800 1,000 1,200

EUR/CHF exchange rates

Period-end exchange rates

1,000 1,015 1,030 1,045 1,060 1,075 1,090 1,105 1,120 1,135 1,150 2022 2021 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0.900 0.925 0.950 0.975 1.000 1.025 1.050 1.075 1.100 1.125 1.150

Operating expenses under control despite inflationary pressure

All items within operating expenses were positively affected by currency effects. Despite this, the cost of materials increased by 7.8% to CHF 1,075 million, representing a significant increase in share of net sales at 31.7%, compared to 28.8% in the previous year. As already seen 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 18.7% or CHF 189 million. Personnel expenses fell by 4.4% to CHF 776 million, which equates to 22.9% of net sales (previous year 23.5%). This decrease was due to exchange rate developments and a decrease in the number of staff across the year as a whole, and despite tariff-related increases in salaries. Other operating expenses net increased by 8.7% to CHF 633 million. This was largely due to the decline in volume and the massive increase in energy costs, which is included under this item. Depreciation decreased by 4.3% to CHF 128 million, while the amortisation of intangible assets decreased to CHF 25 million (previous year CHF 34 million) as a result of impairments connected to two ceramics brands in 2021.

The net financial result remained virtually at the same level as the previous year at CHF -14 million (previous year CHF -13 million). Tax expenses decreased from CHF 133 million to CHF 35 million due to a positive one-off effect. This resulted in a tax rate of 4.7% (previous year 14.9%).

Lower free cashflow

Free cashflow decreased by 30.6% to CHF 562 million, which was primarily due to the lower operating cashflow, negative effects from the changes in net working capital and the extremely negative currency effect. Compared to the previous year, lower investments in property, plant and equipment and intangible assets had a positive effect (see also Consolidated financial statements Geberit Group, Note 27). The free cashflow margin reached 16.6% (previous year 23.4%). CHF 1,003 million, or 178% of the free cashflow, was distributed to shareholders during the reporting year as part of the dividend payment and the share buyback programme.