Annual Report 2016


Improved profitability

In the 2016 financial year, the results of the Geberit Group were once again impacted by acquisition, divestment and integration costs, and income related to the Sanitec acquisition – albeit much lower than in the previous year. For better comparability, adjusted figures are shown and commented on.

The adjusted operating cashflow (adj. EBITDA) rose by 14.6% to CHF 794.9 million, its highest ever level in Geberit’s history. The adjusted EBITDA margin came to 28.3% compared with 26.7% in the previous year. Foreign currency developments did not have any material impact on the adjusted EBITDA margin.

EUR/CHF exchange rates 2015/2016

(Period-end exchange rates)

The very good development of the operating margins was supported by synergies derived from the integration of the Sanitec business, volume growth and – in spite of an increase in the second half of the year – lower raw material prices.

The adjusted operating profit (adj. EBIT) rose by 16.2% to CHF 686.5 million, and the adjusted EBIT margin reached 24.4% (previous year 22.8%). Adjusted net income improved by 18.4% to CHF 584.0 million, which led to an adjusted return on sales of 20.8% (previous year 19.0%). The adjusted earnings per share were up by 19.8% to CHF 15.85 (previous year CHF 13.23). This above-average increase when compared with the operating results is explained by an improved financial result and a slightly smaller number of shares.

EBIT, EBITDA, Net income, Earnings per share (EPS) 2014 – 2016

(in CHF million) (EPS: in CHF)

Operating expenses remain on track

Total adjusted operating expenses increased by 6.0% in 2016 to CHF 2,122.5 million, which is below average when compared to the net sales growth. As a percentage of net sales, this equates to 75.6% (previous year 77.2%).

The adjusted cost of materials increased by 2.3% to CHF 773.5 million, whereas in percentage of net sales dropped substantially from 29.1% in the previous year to 27.5%. Expenditure was reduced by lower purchase prices for industrial metals and plastic, even though the prices for these materials started trending upwards again in the second half of the year. Adjusted personnel expenses grew by 6.4% to CHF 696.2 million, which equates to 24.8% of net sales (previous year 25.2%). Adjusted for acquisition and currency effects, the adjusted personnel expenses were only slightly higher. The largely tariff-related salary increases were partly offset by synergies and efficiency gains, see also Business and financial review, employees. Adjusted depreciation rose by 4.0% to CHF 99.7 million. The adjusted amortisation of intangible assets amounted to CHF 8.7 million (previous year CHF 6.7 million). Adjusted other operating expenses increased – in part driven by the acquisition – by 11.1% to CHF 544.4 million.

Raw material price development

(Market price; index: January 2010 = 100)

The adjusted net financial result came to CHF -9.3 million, which is an improvement of CHF 7.9 million compared with the previous year. This development can be explained by the exceptional expenditure incurred in connection with the financing of the Sanitec acquisition in the previous year and foreign currency gains (rather than the previous year’s foreign currency losses). Adjusted tax expenses grew by CHF 12.6 million to CHF 93.2 million. This resulted in a slightly lower adjusted tax rate compared with 2015 of 13.8% (previous year 14.0%). A number of one-off effects led to this lower rate.

Acquisition and integration costs in the income statement lower than in previous year

The negative special effects (see table below) arising from the Sanitec acquisition/integration amounted to CHF 10 million as regards EBITDA, CHF 46 million as regards EBIT, and CHF 36 million as regards net income. The non-adjusted figures were CHF 785.2 million for EBITDA, CHF 640.1 million for EBIT, CHF 548.2 million for net income, and CHF 14.88 for earnings per share.

Acquisition and integration related costs
(in CHF million)
Transaction costs 70
Integration costs 2710
Inventory revaluation charge* 280
Total cost on EBITDA level 6210
Depreciation and amortisation* 3136
Total cost on EBIT level 9346
Financing costs 60
Tax effect -28-10
Total cost on net income level 7136
* mainly related to purchase price allocation

Increase in free cashflow

The considerably higher operating cashflow (EBITDA) and an improved financial result on the one hand and higher absolute tax expenditure on the other led to an increase in net cashflow of 17.2% to CHF 699.0 million. A slight decline in the investments in property, plant and equipment and negative effects of the change in net working capital resulted in an increase in free cashflow of 16.5% to CHF 563.9 million (see also Financial Statements of the Geberit Group, Notes to the Consolidated Financial Statements, 28. Cashflow figures). Free cashflow was used to pay distributions of CHF 309.3 million to shareholders, to repay debts of net CHF 172.8 million and, as part of the last phase of the share buyback programme, to buy back shares for CHF 50.7 million.