Geberit misses estimates, shares slip By Investing.com

Investing.com — Shares of Geberit (SIX:) fell on Thursday following the company’s second-quarter results and updated guidance, which were slightly below analysts’ expectations.

At 5:25 a.m. (0925 GMT), Geberit was trading 4.1 percent lower at CHF 506.60.

According to analysts at UBS Global Research, results reported by Geberit for the second quarter were broadly in line with consensus forecasts, but revised guidance points to a potential downside for the full year.

Geberit reported 224-quarter sales of CHF 801 million, reflecting a 5.2 percent increase in local currencies, although a 1.1 percent drop in foreign exchange rates affected the reported figure. This was close to consensus expectations of CHF 799 million and the UBS estimate of CHF 818 million.

On an organic basis, sales growth was slightly better at 110 basis points. The company’s EBITDA was CHF 243 million, slightly below consensus estimates of CHF 245 million and UBS’s projection of CHF 252 million.

EBITDA margin was 30.3%, slightly below consensus expectations of 30.6% and the UBS forecast of 30.8%. Despite a 30 basis point year-over-year margin improvement driven by higher utilization and price/cost benefits, this was offset by wage inflation and rising capital expenditures.

Net profit for the second quarter was CHF 160 million, also below consensus estimates of CHF 163 million and UBS’s estimate of CHF 176 million. Free cash flow (FCF) increased slightly to CHF 246 million, up 4.7% year-on-year. The company’s net debt increased to CHF 1.34 billion, compared to CHF 0.97 billion at the end of FY23 and CHF 1.28 billion at the end of FY123.

Geberit’s performance varied from region to region. All regions except the Americas posted organic growth in Q2, with Europe up 4.8% in local currencies, the Middle East/Africa up 21.4% and the Far East/Pacific up 5.4%.

In contrast, America reported a 2.1% decline in local currencies. Performance by segment was mixed, with bathroom systems remaining broadly flat year-on-year, up 0.7%, while plumbing and flushing systems (+7.1%) and plumbing systems (+ 7.0%) showed a more dynamic growth.

The company’s EBITDA margin indicated that pricing and volume/mix contributed a net 290 basis points, but this was more than offset by other costs, including energy, which led to a net reduction of 220 basis points basic. The currency impact was minor, reducing the margin by 40 basis points.

Geberit revised its guidance for the full year, now forecasting net sales to remain at the previous year’s level in local currencies and an EBITDA margin of around 29%. This aligns with the medium-term target range of 28-30%.

Analysts at UBS Global Research anticipate organic growth of 1.1% for FY24E, compared to their previous estimate of 1.2%, and an adjusted EBITDA margin of 29.5%, slightly above their forecast of 28.8%. Assuming no appreciation in local currencies and a 1.3% decline due to foreign exchange, FY24E EBITDA is estimated at around CHF 880-885 million.

This indicates a downside risk of 3% compared to the consensus EBITDA estimate of CHF 911 million and the UBS estimate of CHF 887 million.

“With org. 1.7% growth recorded for H124, guidance implies a softer season H2 decline of c-2%. This is consistent with our view that growth momentum will slow as soft offsets fade,” analysts at UBS said.