Annual Report 2023

Annual Report 2023



Operational flexibility and cost discipline lead to significant increases in operating margins

Despite the very difficult market environment with significantly lower volumes and considerable wage inflation, profitability could be increased. Operating margins rose significantly, while operating profit and operating cashflow increased slightly. This strong performance was made possible primarily by the high level of operational flexibility, especially in the plants and logistics, the fall in raw material and energy prices, and consistent price management.

In Swiss francs, all results were heavily impacted by the negative currency development. In total, operating cashflow (EBITDA) increased by 1.4% to CHF 921 million. After currency adjustments, this corresponded to an increase of 7.8%. The EBITDA margin increased significantly by 310 basis points to 29.9% compared to the same period in the previous year. Operating profit (EBIT) increased by 1.8% to CHF 769 million (currency-adjusted +8.8%), corresponding to an EBIT margin of 24.9% (previous year 22.3%). Mainly due to a positive one-off tax effect in the previous year and a more negative financial result compared with the previous year, net income declined by 12.6% to CHF 617 million (currency-adjusted -6.3%), corresponding to a return on net sales of 20.0% (previous year 20.8%). Earnings per share fell by 10.2% to CHF 18.39 (previous year CHF 20.48). However, due to the positive effects of the share buyback programme, the decrease was less than proportional compared to the development of net income. Currency-adjusted, this resulted in a decrease of 3.7%.

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

2023 2022 2021 0 5 10 15 20 25 30 EBITDA EBIT 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 2023 2022 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. The cost of materials decreased by 17.5% to CHF 887 million, representing a significant decrease in share of net sales at 28.8%, compared to 31.7% in the previous year. This decrease was due to increased sales prices and – following an increase in the first quarter – continuously declining raw material prices throughout the rest of the year. Compared to the previous year, the impact of price changes for raw materials was -2.6% or CHF -25 million in local currencies. Despite tariff-related salary increases, personnel expenses fell by 3.4% to CHF 750 million, which equates to 24.3% of net sales (previous year 22.9%). The decline is due to the decrease in the number of staff across the year. Other operating expenses net decreased by 16.8% to CHF 526 million. This was largely due to the volume decline and the decrease in energy costs, which is included under this item, plus the lower marketing costs as part of operational flexibility. Depreciation increased by 3.5% to CHF 132 million, while the amortisation of intangible assets decreased to CHF 20 million (previous year CHF 25 million) as a result of the omission of impairments compared to the previous year.

The net financial result was CHF -27 million (previous year CHF -14 million). This lower value was the result of higher interest charges due to increased net debt and increased interest rates, plus exchange rate losses. Tax expenses increased from CHF 35 million to CHF 125 million due to a positive one-off effect in the previous year. This resulted in a tax rate of 16.8% (previous year 4.7%).

Increase in free cashflow

Despite the difficult market environment, free cashflow increased by 11.3% to CHF 625 million. This was due to higher operating cashflow and a positive year-on-year development in net working capital. In contrast, the significantly higher investment volume had a negative impact (see also Consolidated financial statements Geberit Group, Note 27). The free cashflow margin reached 20.3% (previous year 16.6%). CHF 662 million, or 106% of the free cashflow, was distributed to shareholders during the reporting year as part of the dividend payment and the share buyback programme.