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(Sharecast News) - Geberit reported steady first-quarter results on Tuesday, as underlying sales growth and margin improvement were offset by a stronger Swiss franc, while the Swiss bathroom fittings maker warned that geopolitical risks had made the construction outlook harder to assess.
Reported net sales slipped 0.7% year on year to CHF 873m, in line with analyst forecasts cited by Reuters.
In local currency terms, however, sales rose 3.4%, ahead of consensus expectations of 2.7% cited by Investing.com, supported by higher volumes and prices.
The stronger Swiss franc had a significant translation effect, reducing reported sales by CHF 35m when foreign revenues were converted back into the group's reporting currency.
Growth was strongest in Europe and in the Middle East and Africa, while demand weakened in China and the Americas.
EBITDA rose 2.3% to CHF 283m, slightly ahead of Visible Alpha consensus expectations of CHF 279m cited by Reuters.
The EBITDA margin improved to 32.5% from 31.5% a year earlier, helped by volume growth, pricing and lower material costs, as well as the absence of significant one-off costs booked in the prior-year period.
Net income increased 4.5% to CHF 196m, while earnings per share rose to CHF 5.94.
Geberit said margins were supported by lower material costs and pricing, although wage inflation and higher spending on marketing, IT and digitalisation weighed on profitability.
Investors were now focused on whether the company could sustain pricing momentum as input cost inflation was expected to accelerate in the second quarter.
The company announced extraordinary price increases for June, in addition to previously flagged increases on copper piping in April.
Jefferies said the balance between pricing and costs would be a key issue, alongside the risk that higher prices could dampen demand after any near-term pre-buying by customers.
Geberit warned that geopolitical risks had "significantly increased" because of the Middle East conflict, making it difficult to provide a broader economic outlook, particularly for inflation, consumer sentiment and interest rates, all of which affect construction demand.
"However, the global economy will be exposed to significant uncertainties overall," the company said.
"Europe is expected to face subdued growth prospects as before."
Despite that caution, the company said it expected modest growth in Europe in 2026, supported by renovation activity, while China was expected to remain weak.
Jefferies said the Iran conflict appeared to have had limited impact so far, noting that the Middle East and Africa division delivered organic growth of 13.5%.
At 1201 CEST (1101 BST), shares in Geberit were up 0.69% in Zurich at CHF 523.80.
Reporting by Josh White for Sharecast.com.