We Expect Geberit’s Quality Will Come Through Despite Challenging Outlook for 2023; FVE Unchanged

There were no major surprises in wide-moat Geberit’s full-year results after it released provisional results in February. Our long-term thesis remains firmly intact despite a challenging fiscal 2022 and we expect that the group will be able to use its brand reliability and scale to extract market share gains from its smaller peers, despite weakness in residential construction activities. The group reported an EBITDA margin of 26.8%, falling short of its long-term target between 28% and 30% due to significant raw material inflation. We anticipate that the spillover effect of price increases already implemented and the decline in raw material prices, will offset volume pressure and help profitability return to normalized levels. We reiterate our CHF 505 fair value estimate and still see marginal upside from current levels.