Geberit Ag · SIX:GEBN
Geberit — FY2016 Earnings Presentation
54 slides from Geberit's earnings presentation, Mar 14, 2017
Slide 1: Analyst conference Full year review 2016
Christian Buhl, CEO Roland Iff, CFO Analyst conference Full year review 2016 14 March 2017
Slide 2: Agenda
Agenda Agenda Review C. Buhl Sales development C. Buhl Financial Results R. Iff Sanitec integration C. Buhl Building industry outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl 14 March 2017 2
Slide 3: Review 2016: Excellent results in an improved market environment
Review 2016 Excellent results in an improved market environment • Group net sales increased by 8.3% to CHF 2’809 million • In local currencies, net sales increased by 6.4% organically • Adjusted EBITDA increased by 14.6% • Adjusted EBITDA margin increased by 160 bp to 28.3% • Adjusted net income inc
Slide 4: Review 2016: Dividend increase of 19.0%
Review 2016 Dividend increase of 19.0% • The Board of Directors proposes a dividend of CHF 10.00 per share, an increase of 19.0% vs. previous year • 757’000 shares bought back and cancelled as part of the program completed by February 2016 • New share buy-back program of CHF 450 million over a perio
Slide 5: Investments – In line with the medium-term plan
Review 2016 Investments – In line with the medium-term plan New products Capex, CHF million Modernization & rationalization 147 Capacity expansion 139 16% • 2016 capital expenditures 5.6% below previous year 105 98 86 43% • Increased spend for modernization & rationalization • Investments 2016 corre
Slide 6: Investments – Expansion of logistics center in Pfullendorf
Review 2016 Investments – Expansion of logistics center in Pfullendorf • Expansion of logistics capacity – up to 250 trucks per day • New concept for long goods storage • Innovative technologies and further process innovations • Operation ramp-up as of March 2017 • Capex: EUR 40 million 14 March 201
Slide 7: Innovation and marketing – Increased expenditure
Review 2016 Innovation and marketing – Increased expenditure R&D1, in CHF million 72 56 63 50 51 • Increasing expenditure in innovation and marketing Marketing, in CHF million • R&D expenditure 105 of 2.6% of net 98 87 84 84 sales in 2016 • Basis for future value creation 2012 2013 2014 2015 2016 1)
Slide 8: Innovation – Successful product introductions in 2016
Review 2016 Innovation – Successful product introductions in 2016 Ceramics Geberit urinal system Geberit Silent-Pro New ceramic and No need to remove for New highly sound-insulating plug- complementary product range maintenance & service in drainage system for the Nordics “Nordic style” “Suits every
Slide 9: Customer relations – Key activities, example Germany
Review 2016 (growth vs. 2015) Customer relations – Key activities, example Germany Annual market activities 2016 Customer visits – Push • Wholesaler sales rep. 450 visits 70’000 Customer • Installer / Planer sales rep. 500 visits customer visits visits – Pull • Showroom sales rep. 450 visits (+17%)
Slide 10: Customer relations – First events of integrated sales organization
Review 2016 Customer relations – First events of integrated sales organization “Geberit BauTreff” • 39 "Geberit BauTreff" events with 9'200 customers in urban areas • New concept for customers along entire value chain • Presentation of new & combined product portfolio “Geberit on Tour” • 131 "Geberi
Slide 11: Employees – Decrease due to divestment and synergies
Review 2016 Employees – Decrease due to divestment and synergies Number of employees by Number of employees by business region processes 2016 2016 8% 4% 8% 2% 2% 28% 22% 24% Germany Production Sales & 62% Rest of Western Europe Marketing Eastern Europe Administration Asia / Africa 40% R&D America Ap
Slide 12: Sustainability – Improvement of our environmental footprint
Review 2016 Sustainability – Improvement of our environmental footprint Environmental impact 2007-2016 • Environmental impact in relation to 249 239 net sales declined by 10.8% in 2016 100% -49% • Energy consumption reduced by 5.2% in 2016 • CO2 emissions in relation to net sales reduced by 9.9% in
Slide 13: Social responsibility – Volunteer project in Nepal
Review 2016 Social responsibility – Volunteer project with Geberit employees in Nepal • Geberit employees working together with local people in a community in Western Nepal • Supporting construction work of a water pipeline • Cooperation with Helvetas water projects in Nepal including financial fund
Slide 14: Agenda
Agenda Agenda Review C. Buhl Sales development C. Buhl Financial Results R. Iff Sanitec integration C. Buhl Building industry outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl 14 March 2017 14
Slide 15: Sales development 2016: Strong organic growth in local currencies
Sales development 2016 Strong organic growth in local currencies Net sales, in CHF million Total variance: CHF +215 million (+8.3%) 2′809 +32 +18 +165 2′594 Net sales Organic growth Currency M&A net Net sales FY 2015 in local currency effect (Sanitec / Koralle) FY 2016 +6.4% +0.7% +1.2% 14 March 201
Slide 16: Similar sales growth in first and second half of the year
Sales development 2016 Similar sales growth in first and second half of the year Net sales Variance to prior year Quarter CHF million % CHF % c.a., org. Q1 718.6 12.9% 3.1% Q2 761.2 13.5% 10.2% H1 1'479.8 13.2% 6.7% Q3 692.6 4.1% 6.0% Q4 636.6 2.5% 6.3% H2 1'329.2 3.3% 6.2% 12M 2'809.0 8.3% 6.4% Not
Slide 17: Positive sales development in all regions
Sales development 2016 Positive sales development in all regions Net sales in CHF million and organic growth 2016 by region in % (curr. adj.) Europe 2′570.1 +6.8% America 93.6 Far East / Pacific +0.2% 77.4 +4.3% Middle East / Africa 67.9 +3.5% Total +6.4% 14 March 2017 17
Slide 18: Sales growth in all European countries / regions (1/2)
Sales development 2016 Sales growth in all European countries / regions (1/2) Net sales Variance to prior Country / year CHF Region million % CHF % c.a., org. Germany 861 7.9% 4.7% • Limited market growth of around 2.5% due to capacity constraints of installers Nordic • Strong market growth in Swede
Slide 19: Sales growth in all European countries / regions (2/2)
Sales development 2016 Sales growth in all European countries / regions (2/2) Net sales Variance to prior Country / year CHF Region million % CHF % c.a., org. • Only slightly growing construction Italy 186 7.7% 3.9% market in 2016 France 171 11.6% 4.8% • Outperforming an improved building constructi
Slide 20: Sales growth in all international regions
Sales development 2016 Sales growth in all international regions Net sales Variance to prior Country / year CHF Region million % CHF % c.a., org. • Slowdown of recovery in residential America 94 2.5% 0.2% construction • Stagnation of the institutional market sector • Stabilizing building constructio
Slide 21: All product areas growing
Sales development 2016 All product areas growing Net sales Variance to prior year Product lines CHF million % CHF % c.a., org. TOTAL 2'809.0 8.3% 6.4% Sanitary Systems 1'263.5 10.3% 9.2% Installation Systems 789.9 9.1% 8.0% Cisterns and Mechanisms 254.7 15.1% 14.3% Faucets and Flushing Systems 123.4
Slide 22: Agenda
Agenda Agenda Review C. Buhl Sales development C. Buhl Financial Results R. Iff Sanitec integration C. Buhl Building industry outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl 14 March 2017 22
Slide 23: Financial results 2016: Key figures
Financial results 2016 Key figures CHF million 2016 2015 % YoY Net sales 2'809.0 2'593.7 8.3% • Contribution to net sales of CHF 50 million from M&A and Adj. EBITDA 794.9 693.5 14.6% Margin 28.3% 26.7% currency effect Adj. EBIT Margin 686.5 24.4% 590.9 22.8% 16.2% • One-off adjustments mainly in amo
Slide 24: Income statement
Financial results 2016 Income statement CHF million 2016 % 2015 % % YoY Net sales 2'809.0 100.0% 2'593.7 100.0% 8.3% Cost of materials 774.9 27.6% 784.4 30.2% -1.2% Personnel expenses 702.0 25.0% 671.6 25.9% 4.5% Depreciation 102.0 3.7% 95.9 3.7% 6.4% Amortization 43.1 1.5% 37.5 1.5% 14.9% Other ope
Slide 25: Adjusted EBITDA margin improvement of 160 bp
Financial results 2016 Adjusted EBITDA margin improvement of 160 bp Adjustments / one-off Reported EBITDA margin 28.3% -0.1% -0.1% 0.3% +1.8% 26.7% +1.2% -1.2% 2.3% 28.0% 24.4% Adj. EBITDA Volume Other Price Currency M&A net Adj. EBITDA margin 2015 and product cost effects, net effect (Sanitec margi
Slide 26: Strong increase of metal raw materials spot prices during 2016
Financial results 2016 Strong increase of metal raw materials spot prices during 2016 Q4 FY 20161 20161 150 Polystyrene +7% +10% 140 130 Polyethylene -2% -7% 120 ABS +6% +9% 110 Aluminum +3% +12% 100 90 Copper +14% +17% 80 Nickel -1% +16% 70 Zinc +21% +77% 60 50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 Ind
Slide 27: One-off cost related to Sanitec acquisition
Financial results 2016 One-off cost related to Sanitec acquisition Acquisition, divestment, integration and 2016 2017 outlook restructuring related cost CHF million CHF million Integration cost 15 5 Restructuring costs - 30-402) One-off (gain) loss from divestment1) (5) 1 Total net cost on EBITDA le
Slide 28: Adj. net income and adj. EPS significantly above previous year's level
Financial results 2016 Adj. net income and adj. EPS significantly above previous year’s level CHF million 2016 % 2015 % % YoY Operating profit (EBIT) 640.1 22.8% 498.3 19.2% 28.5% Financial result, net -9.3 -0.3% -23.5 -0.9% -60.4% Profit before income tax expenses 630.8 22.5% 474.8 18.3% 32.9% Inco
Slide 29: Strong free cashflow growth
Financial results 2016 Strong free cashflow growth CHF million 2016 2015 % YoY EBITDA 785.2 631.7 24.3% Financial result, net -9.3 -23.5 Income tax expenses -82.6 -52.4 Changes in deferred taxes 1) and current income tax liabil. and prov. -21.4 -19.5 Changes in non-current provisions 32.0 23.9 Non-c
Slide 30: Significant reduction of net debt
Financial results 2016 Significant reduction of net debt CHF million 31.12.2016 31.12.2015 Cash and cash equivalents 509.7 459.6 Net working capital 147.3 146.6 Property, plant and equipment 726.5 715.4 Deferred tax assets 96.7 95.7 Financial assets, other non-current assets and derivatives 26.3 25.
Slide 31: Proposed dividend increase of 19.0%
Financial results 2016 Proposed dividend increase of 19.0% CHF thousand 2016 2015 Net income Geberit AG 389'771 300'924 Balance brought forward 3'813 4'037 Withdrawal from free reserves - 10'000 Total available earnings 393'584 314'961 Transfer to free reserves 20'000 - Proposed / paid dividend 370'
Slide 32: One-off impact on reporting 2017
Financial results 2016 One-off impact on reporting 2017 • Net sales for Koralle only included for H1 2016 (CHF 23 million); organic growth rates will be calculated excluding Koralle • Varicor (CHF 10 million net sales in 2016) deconsolidated as of January 1st 2017; organic growth rates will be calcu
Slide 33: Agenda
Agenda Agenda Review C. Buhl Sales development C. Buhl Financial Results R. Iff Sanitec integration C. Buhl Building industry outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl 14 March 2017 33
Slide 34: Sanitec integration: Overall integration roadmap
Sanitec integration Overall integration roadmap 2017-19 2016 “Capture the strategic benefits” 2015 “Go live as one company” • Capture remaining “Get the basics” synergies • One face to the • Optimized business customers processes • Integration planning • Harmonize • Integrated innovative • Organizat
Slide 35: Status of Sanitec integration (1/2)
Sanitec integration Status of Sanitec integration (1/2) • One single company since January 1st, 2016 Organization • Functional organization – no divisions and matrices • Exit of 10 locations Sales and • One customer oriented sales organization marketing • CRM systems and sales processing fully integ
Slide 36: Status of Sanitec integration (2/2)
Sanitec integration Status of Sanitec integration (2/2) • Roll-out of Geberit production system (GPS) Operations • First improvement projects implemented • Divestment of non-core businesses Koralle and Varicor – limited synergies: Business portfolio Made to measure products Different customer fo
Slide 37: Agenda
Agenda Agenda Review C. Buhl Sales development C. Buhl Financial Results R. Iff Sanitec integration C. Buhl Building industry outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl 14 March 2017 37
Slide 38: Building industry outlook: Europe
Building industry outlook Europe Favorable but mixed market environment • Confident about Germany – bottleneck of installers limiting growth • Only moderate growth in Switzerland • Positive for Austria • Slowdown of growth in Nordics – substantial lower growth in Sweden • Positive outlook for Benelu
Slide 39: North America: Stagnation in institutional sector
Building industry outlook North America Stagnation in institutional sector • Moderate growth of residential construction • Stagnation in institutional segment Healthcare declining Education growing moderately 14 March 2017 39
Slide 40: Asia / Pacific: Stabilization in China
Building industry outlook Asia / Pacific Stabilization in China • Stabilization of residential construction sector in China • India remains positive • Market growth in Australia • Mixed picture in South East Asia 14 March 2017 40
Slide 41: Middle East / Africa: Weak market in Gulf region
Building industry outlook Middle East / Africa Weak market in Gulf region • Ongoing weak construction market in the Gulf region due to the low oil price • Only sideways development of construction sector in South Africa • Continued political uncertainty in Northern Africa / Near East 14 March 2017 4
Slide 42: Agenda
Agenda Agenda Review C. Buhl Sales development C. Buhl Financial Results R. Iff Sanitec integration C. Buhl Building industry outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl 14 March 2017 42
Slide 43: New product introductions 2017 – Geberit AquaClean Tuma
Geberit outlook New product introductions 2017 – Geberit AquaClean Tuma • Mid-level shower toilet with Compact design Comfort functions Numerous technical features, e.g. rimfree • Two types: Complete (seat + ceramic) and seat only 14 March 2017 43
Slide 44: New product introductions 2017 – Wall-mount electronic tap system
Geberit outlook New product introductions 2017 – Wall-mount electronic tap system • Electronic tap system with attractive, slim and modern design • Wall-mounted and deck-mounted tap housing models in 2 different designs • Easy installation due to benefits of Geberit installation elements • Easy and
Slide 45: New product introductions 2017 – Floor even shower tray Setaplano
Geberit outlook New product introductions 2017 – Floor even shower tray Setaplano • Comfort, cleanliness and usability Seamless, joint less and non-slip surface Decentral drain instead of middle position Easy-to-clean drain area where no dirt deposits can build up • Safe and fast installation
Slide 46: New product introductions 2017 – Supply piping system Volex
Geberit outlook New product introductions 2017 – Supply piping system Volex • New supply piping press system • For all common applications: drinking water, radiator heating, underfloor heating • Complete and price competitive system for European expansion markets • Multilayer, stable and corrosion-r
Slide 47: New product introductions 2017 – Versatile bathroom series Acanto
Geberit outlook New product introductions 2017 – Versatile bathroom series Acanto • Versatile bathroom series Soft organic design Slim-rim washbasin Smart storage solutions Modular furniture program • Innovative technical features Concealed ceramic overflow Easy and fast fixing 14 March
Slide 48: Renewal of site in Ukraine
Geberit outlook Renewal of site in Ukraine • Shut-down of old part of factory • Transfer of capacity to existing new part of factory with spare capacity • Construction of new premises for logistics, administration and technical department • Total investments: EUR 6 million 14 March 2017 48
Slide 49: Outlook Sanitec integration
Geberit outlook Outlook Sanitec integration 2017-19 2016 “Capture the strategic benefits” 2015 “Go live as one company” • Capture remaining “Get the basics” synergies • One face to the • Optimized business customers processes • Integration planning • Harmonize • Integrated innovative • Organizationa
Slide 50: Agenda
Agenda Agenda Review C. Buhl Sales development C. Buhl Financial Results R. Iff Sanitec integration C. Buhl Building industry outlook C. Buhl Geberit outlook C. Buhl Summary C. Buhl 14 March 2017 50
Slide 51: Geberit with a successful year 2016
Summary Geberit with a successful year 2016 • Strong organic sales growth outperforming markets • Further improved profitability • Operating results on new record levels • Sanitec integration on track – majority of synergies captured • Successful new product introductions proving our innovation lead
Slide 52: Outlook
Summary Outlook • Favorable but mixed construction market outlook • Increasing raw material prices and personnel cost (labour tariffs) • Fundamentals of Geberit remain very solid • Further integration of Sanitec focusing on harmonization of systems and business processes • Strong cash generation ena
Slide 53: Important dates in 2017
Summary Important dates in 2017 • 05 April 2017 • General meeting • 11 April 2017 • Dividend payment • 02 May 2017 • Interim report on the first quarter 2017 • Conference call • 17 August 2017 • Interim report on the second quarter 2017 • Conference Call • 31 October 2017 • Interim report on the thi
Slide 54: Disclaimer
Disclaimer While Geberit is making great efforts to include accurate and up-to-date information, we make no representations or warranties, expressed or implied, as to the accuracy or completeness of the information provided in this handout and disclaim any liability for the use of it. The statements