Geberit Aktie

Good morning, ladies and gentlemen. Welcome to our Q1 results conference call.

Geberit had a successful start into the year 2026. Let me start with the key statements for Q1.

First, an encouraging net sales growth of 3.4% in local currencies, negatively affected by prebuying of wholesalers in December last year and the cold weather in Northern Europe in January and February this year.

Second, stable operating margins in onetime costs from the previous year are -- and currency effects are excluded.

And the third, a growth of earnings per share of 4% in Swiss francs and 10% in local currency.

Let me now comment on our net sales development in more detail. Net sales grew by 3.4% in local currencies to CHF 873 million, equally driven by volume and price. A strong negative currency effect of CHF 35 million or minus 4.0% led to a net sales decline in Swiss francs of minus 0.7%.

We come now to the regional development. All growth figures refer to growth in local currencies. In Europe, net sales increased by 3% with growth in all markets, except the Nordics due to the bad weather in January and February. In the Middle East, Africa region, net sales increased by 13%. Sales in March also increased despite the war in Iran.

Only a small portion of the business in March was affected by the war, namely shipments that were logistically disrupted due to the closure of the Strait of Hormuz. This currently still disrupted business accounts for less than 1% of group sales and is therefore, very limited on group level.

The remaining business in the Gulf region, which is not served through the strait of our moves, has been and continues to operate at normal levels.

This brings me to the other two international regions. In America, net sales increased in Q1 -- decreased in Q1 by 4% due to a softer project business. And in Far East Pacific, net sales declined by 1%, driven by declines in China, partially offset by growth in India.

Let me now comment on the sales development per product area. Installation & Flushing Systems grew by 4% and Piping Systems and Bathroom Systems both increased by 3%.

I will now comment on the operating and financial results. I'll start with the EBITDA development. EBITDA increased in Swiss francs by 2% and in local currencies by 7%, driven by the base effect from onetime costs booked in the previous year. The EBITDA margin reached 32.5%, an increase of 100 basis points, which can be fully attributed to the onetime costs last year.

Excluding this onetime effect and in local currencies, the EBITDA margin remained stable. In Swiss francs, the EBITDA margin decreased only slightly, thanks to our strong natural hedge.

Positive operational margin drivers were a positive net price effect driven by increased sales prices and slightly lower direct material prices. Secondly, positive operating leverage from the volume growth. And thirdly, efficiency gains.

These positive margin drivers were offset by wage inflation of 3.4% and secondly, dedicated investments in marketing, IT and digitalization.

The EBIT margin increased in line with the EBITDA margin by 90 basis points and reached 28.0%, supported by the before mentioned base effect. Similarly, the net income margin increased by 110 basis points to 22.4%.

Earnings per share increased by 4% and reached CHF 5.94. In local currencies, EPS increased by 10% versus previous year.

Let me start our market outlook with some preliminary remarks. The outbreak of the war in Iran and the heightened geopolitical tensions significantly increased the macroeconomic uncertainties. This makes the forecast of inflation, interest rates and consumer confidence, all important drivers for the construction industry, very difficult.

The following market outlook, therefore, excludes potential impact of the war in Iran on building construction demand outside the Gulf region as these effects cannot be reliably quantified. Under the assumption, we continue to expect slight growth in Europe in the course of 2026. However, no broad recovery yet. Based on the stabilized building permits last year, we expect a stabilization of the new build activity this year. For the renovation demand, which represents around 60% of our business, we are more optimistic and expect a slight growth in Europe this year.

Outside Europe, we foresee a mixed picture for the building construction industry. Some markets should see good demand, for example, India. Other markets will continue to decline, for example, China, due to the collapse of the new build sector in China.

We continue to refrain from a market outlook for the Gulf region. However, and as already mentioned, the direct sales impact from the war remains very limited. Less than 1% of group sales are currently affected due to the closure of the Strait of Hormuz. The remaining business in the Gulf region is still running at normal levels.

This brings me to the impact of the Iran war on the supply side. Regarding the availability of raw materials, we are not experiencing any interruptions. We continue to receive all raw materials required for our production facilities in the necessary quantities.

On the pricing side, however, we are affected by substantially higher plastics and higher energy prices. Overall, we expect direct material prices to increase by mid- to high single digits in Q2 compared to Q1 this year and also versus Q2 last year, driven by higher plastics and energy prices.

To compensate for the absolute cost impact of these price surges, we decided to implement an extraordinary sales price increase as of June this year. This sales price increase affects only plastic and energy-driven products and the magnitude will be differentiated by product categories. Overall, across the entire product range, this extraordinary price increase as of June amounts to approximately 2% of group net sales.

Together with the regular price increase as of April and the already communicated extraordinary price increase for Copper Piping Systems as of April, we expect for the full year 2026, an overall sales price effect of 2% to 2.5%.

Let me finish our outlook with a trading update for April. Like-for-like net sales in the month of April were up mid-single digits.

Let me now briefly comment on the Geberit priorities this year. We will continue to have a strong focus on new products this year. For example, the new shower solution launched in April, but also important new products introduced over the last years, like, for example, the new Duofix, FlowFit, Mapress Therm and the shower toilet Alba. Other important initiatives this year include new marketing initiatives and further efforts in the area of IT and digitalization. In total, we are increasing our operational expenditures by CHF 20 million this year with these initiatives.

Let me close our introduction with a short summary. Geberit had a successful start into the year 2026 with an encouraging net sales growth in local currencies. We increased our operating margins, thanks to a onetime effect last year. Excluding this base effect and currency effects, we kept operating margin stable despite significant wage inflation and increased OpEx for various strategic and operational initiatives.

For 2026, we expect a slight growth of the building industry in Europe and a mixed environment overseas under the assumption that the war in Iran has no significant impact on the building demand outside the Gulf region. The direct sales impact of the war in Iran is very limited. Less than 1% of group sales are currently affected due to the logistical constraints to the Strait of Hormuz and to the Persian Gulf.

On the supply side, we are not experiencing any disruptions and continue to receive all raw materials required for manufacturing.

On the pricing side, we will implement an extraordinary sales price increase effective June this year to offset the absolute cost impact of substantially higher plastics and energy prices.

Furthermore, and irrespective of the market environment and increased geopolitical and macroeconomic uncertainties, we will continue to invest this year in sales and marketing initiatives in innovation, in efficiency and in capacity to further strengthen our market position in and outside Europe in the short and in the long term.

Thank you for your attention. We are now ready to answer your questions.

[Operator Instructions] Our first question comes from Daniela Costa from Goldman Sachs.

I have three questions, if possible. But first, I guess, given you're announcing the price rise in June, do you see any pattern of stocking up at wholesalers in 2Q or any worry that they will actually destock given the pricing levels that the products are getting to?

Then second thing, just on raw materials, you very clearly said you don't really see any particular tightness or issues in getting hold of raw materials, but are you considering like stocking up more intensely? And how would that impact sort of like free cash flow generation this year, if so?

And then the third one, just if you can do your usual comment for April start.

To the first question, yes, we believe that the extraordinary price increase as of June will have a prebuying effect. Obviously, wholesalers will try to buy at a lower level. So that will have a positive effect.

Second question with regards to availability of raw materials, we have taken several measures. One of them, we have also increased our safety stocks. So therefore, we are confident that we will not run in any shortages in terms of raw material availability.

And the third question was around April, but I really didn't get it. What was the question again?

Normally, you comment on how April has started.

I'm sorry, we did that in the introduction, maybe...

Sorry, I missed that.

So like-for-like, net sales were up mid-single digit in April.

Okay. And just on the second one, on the point, I was also wondering sort of like if you're stocking up -- are you stocking up more than normal on raw mats? Should we think about any impact on cash conversion this year related to that? Or is it wash throughout the year?

We've already done so by the end of Q1. So beyond that, at that point, we're not expecting much more. So any figures would already be reflected in the current figures.

The next question comes from Elodie Rall from JPMorgan.

To start with just a follow-up on this mid-single-digit sales increase like-for-like that you've seen in April. Does that -- do you think this is already positively impacted by prebuying given it's accelerated versus Q1? That's my first question.

Second, the price increases that you are announcing, you said will be offsetting on absolute the cost impact. So what are the margin implications in your view at this stage?

And lastly, can you give us a bit of color about the contribution from new products in Q1 sales?

First question about April. We announced this extraordinary price increase to customers in the second half of April. So most probably some of the April numbers were already driven by prebuying from wholesalers.

Second question, we want to compensate the absolute impact of the raw material price increase with this extraordinary sales price increase. That means that there is a slight negative impact in terms of relative margins.

And the third question, in terms of new products, we have had a very good start also with the new products into the first quarter. All the before mentioned new products were developing very nicely with significant growth also in the first quarter.

The next question comes from Martin Hüsler from Zürcher Kantonalbank.

My first question is, can you talk a bit about Europe and if you saw diverging trends, except maybe for the Nordics that you mentioned, but what do you see in the, let's say, three, four biggest markets? That's my first question.

So the, let's say, biggest impact -- extraordinary impact we have seen in Q1 was the weather in Northern Europe in January and February, which affected sales negatively. However, March was already much better and some of the lost sales due to the weather, we think, have been compensated in March.

Secondly, we have not yet seen any direct impact from the war in Iran on demand of the building construction industry in Europe. I think these are the two most important remarks to the market in the first quarter in Europe.

Okay. And if you could share, let's say, one word on Germany.

Germany is the same as what I just said for Europe. In Germany, obviously -- also the northern part was more affected by the bad weather, but the fundamental demand has not been affected. We expect for Germany overall this year, a stable, maybe even slightly positive market, also supported by the new build.

Building permits have now been growing in Europe -- sorry, in Germany for the residential sector for fourth quarters in a row. Overall, building permits for the residential sector were up 2% last year. Also the first 2 months, January and February, building permits were quite significantly up in the residential sector in Germany. Even the nonresidential sector started to stabilize as well for the last 2 quarters in Germany. So we are, let's say, quite optimistic for a stable or slightly positive market in Germany this year.

That's helpful. And then maybe my second question is about the extra spending on marketing and digital initiatives. You already mentioned them for Q1. I thought they were a bit back-end loaded. Or should we really assume them to happen like a quarter-by-quarter, roughly CHF 5 million plus?

So one does not exclude the other. So yes, we already had cost in Q1. But yes, they're ramping up in the course of the year, but they had in Q1 a slightly higher effect than the CHF 20 million of last year.

The next question comes from Martin Flueckiger from Kepler Cheuvreux.

I've got three questions. The first one is on the consumer sentiment in Europe. We've seen that particularly with regards to expectations for financial conditions in households, the consumer sentiment is falling sharply. Are you not concerned for your business as we move into H2 and 2027 that this will have -- this will start to have an impact on your business? That's my first question.

And the next one, the second one is on the development of showroom visits in Q1. I was wondering whether you had any data to share or observations to share with regards to showroom visits, whether there was some positive or negative momentum, that would be helpful if you could elaborate on that.

And then finally, my third question is on the volume mix and pricing effects on the EBITDA margin in Q1. I was a little bit surprised by the volume mix effect, which, to my mind, looked a little bit lower than what I had anticipated at least. I was wondering whether there was a negative mix effect in there or how -- whether you could provide a little bit more color on that. And with regards to the pricing effect on the EBITDA margin, that was a little bit higher than -- more significantly higher than what I had anticipated. So I was just wondering whether it was all just raw material price driven or whether there were any special selling price effects in there.

I'll start with the third question. The price effect in the first quarter was a bit higher than what we also expected. Roughly half of the net sales growth in local currencies of the 3.4% was driven by pricing. And there is a little bit higher pricing effect. We had also a higher net price effect in the EBITDA bridge. And in other words, a little bit lower volume growth, and that means a little bit of lower volume effect in the EBITDA bridge.

The second question about showrooms in the first quarter, no specific observations or data. We didn't hear any specific remarks from any specific regions with the exception maybe obviously, of the Gulf region, where the situation has an impact on the showroom activities. But apart from that, we didn't hear any specific observations or activities or changes in activities in showrooms in the first quarter.

With regards to consumer confidence, consumer confidence might be a driver for some private business decision. It may be. We have not yet put a lot of efforts into better foreseeing what might happen with the consumer confidence in our business. Important for us is that we are prepared to whatever might happen in the second half of the year. So we are not very much worried at the moment about the topic you mentioned with the consumer confidence.

The next question comes from John Revill from Reuters.

Okay. So I was just wondering, just on your outlook, it's basically the wording is exactly the same as it was at full year. And I just wondered if you just thought -- as the situation the conflict is still going on in the Middle East, is it more of a concern now because it seems to be lasting longer? Or is there more of a concern around that? Or is the situation more serious do you think because it's basically continuing?

And then secondly, could you just expand a bit more on the channels, how it affects you in terms of -- I know you talked about inflation and consumer confidence. But I mean, how else could affect you? I mean it's not affecting you directly. You say only about 1% of your sales -- in the group sales are affected by currently at the moment. But on the broader thing, I mean, could this lead to higher interest rates because of feels like inflation, which therefore, weighs on construction. Could you just give us a little bit more of a kind of general view of how the macro situation could be affected by the Middle East and how that would then weigh on the construction sector?

First question, you're right. Our outlook is not substantially different to what we said 6 weeks ago or 7 weeks ago with our full year results because we haven't seen any impact on our markets from the situation in the Middle East, for example, on Europe at the moment.

Which brings me to your second question is exactly what we tried to say in our introduction. We are not the macro experts. We do not know what are the potential impact from the war in the Middle East or in Iran to the macro environment, to interest rates and then indirectly, obviously, build the construction demand since this is not part of our circle of competence, we are not putting a lot of effort into that.

We're putting our effort into being at best flexible whatever might happen. For example, we've talked about that before, ensuring the raw material availability, making sure that we take the right pricing decision. So we are preparing to all the scenarios, and we are not speculating on what might be the impact of the Middle East on the consumer confidence in Europe.

Excellent. Okay. And just also you announced this extraordinary price increase of 2%. Do you think that -- I mean, could there be -- do you think that's going to be it for the year then? Or do you think there could be -- or you're not ruling out there could be something else later on then if prices go up substantially again? And also what was your normal price increase for this year as well?

So we did a normal price increase of around 1% as of April, which turned out to be a bit higher, as I just explained before, due to various mix effects. We did a second -- we did -- sorry, first extraordinary price increase only for copper pipe systems, that's a relatively small part of our business as of April and now this extraordinary price increase for plastic and energy-related products. And with that, we try and we will compensate for the absolute impact of the raw material price increases.

What will happen in the rest of the year, that also depends obviously on the raw material pricing side. At the moment, we feel comfortable with this second extraordinary price increase of around 2% as of June.

The next question comes from Arnaud Lehmann from Bank of America.

My question is relating to other costs, fixed costs in particular. I think in Q1, your personnel costs are down a little bit 4%. I guess there's some currency effects in there. But could you talk about what other costs you're expecting, including wages for the year? And do you think that the price increase and the efficiencies will be enough to offset these other costs, please?

So we're not commenting on the full year margin. But on the bit on piece that you asked, on the personnel expenses, yes, it's minus 4% in Swiss francs. Currency adjusted, it was slightly down only. It was wage increase of 3.4% in Q1. We expect for the full year wage increase of roughly 3%.

Apart from that, no special effects to be mentioned.

And my second question, if I may, just on raw materials availability. You said there's no -- you haven't had any issues so far. Could you give us a bit of color on any -- I mean, I guess, in your European operations, are there any energy or raw materials that are sourced from Asia? And have you seen any shift in the availability of these products? And did you have to make any adjustments in your supply chains?

No. Our raw material supply is very regional and local. So most raw materials which we use in Europe is coming from Europe as well. Hardly any materials coming from Asia into Europe and almost no material coming from the Middle East.

The next question comes from Cedar Ekblom from Morgan Stanley.

I just had a follow-up question around the new product introductions. You spoke qualitatively around good adoption, positive trends there. I wonder if you could give us a little bit more quantitative color on how much of your volume growth in the first quarter came from new product introductions and also some quantitative view on what you think new product introductions can contribute to the top line in 2026?

I can't quantify the exact number of the contribution of new products into the volume growth of the first quarter, but I can give you an indication.

In average, we generate about 20% of net sales -- annual sales with new products. The growth contribution also in the first quarter of the new products was more than 20%, although I don't have an exact number in mind.

The next question comes from Yassine Touari from On Field Investment Research.

I think just a bit of a clarification on the pricing. So it seems that your pricing in the first quarter was approximately 1.7%, could you explain a little bit what is the mix effect and what is the execution of the price increase, which was higher than expected?

And you're mentioning a mid-single-digit like-for-like growth in April. Is it fair to assume that it's the same kind of like a price increase, 1.5% to 2%? Or was the mix effect different?

So to the first question, the mix effect which we have in pricing are of various nature. First of all, keep in mind, we have 10,000 of article numbers in SKUs, and we have a differentiated pricing approach in general. So we don't increase every product exactly by the same price increase. So it means you have a mix effect just from the assortment.

We have a mix effect also from the type of business. For example, project business versus standard business, you have some fluctuations there that also has an impact on pricing, obviously, project versus standard.

We have geographical mixes. And in the first quarter, it turned out that all these mix effects turned more or less into the same direction. That's the reason why our price effect in the first quarter was somewhat higher than what we also expected internally.

And the second question was about April, if that was also driven by the price effect? Yes. Obviously, that was driven by the price effect as well. We don't know yet the exact number, but that might have been most probably in the same range as in the first quarter.

Is there any reason why this mix effect should be more normal in the future? Or is it -- or do you think this positive mix effect could be sustained for the year?

No, that's more also coincidence. It some coincidence, sometimes you have just a lot of statistics that things go in the same direction. So that's not a structural effect. It's just by coincidence. That's the reason why pricing is not an exact science. It's quite hard to predict the price effect of 10,000s of articles, including project business, including rebate systems, including different systems country by country. But it's just statistically nothing to bother. It was a bit higher than expected. Sometimes it's a bit lower. So nothing to put your brain force into.

So your pricing view for 2026 of 2% to 2.5% excludes any mix effect. Is that the right way to look at it?

It includes the mix effect, which we have seen in the first quarter, of course, because that's actual.

The next question comes from Christian Arnold from ODDO BHF.

A follow-up question on the pricing. You told us that the last extraordinary price increase as of June has been announced second half of April. Could you remind me about the extraordinary price increase for copper? When have you announced that to the wholesalers?

That was, I think, second half of February, but I can't remember exactly. I think it was second half of February. But don't overestimate the effect because copper is relatively small.

Okay. And it's also in the magnitude of around 2%?

The price increase was around 5% or exactly 5%.

But I mean the share of sale of copper pipe systems is not too big. That's what I meant.

Clear. Then on the region, Middle East, Africa, I mean, you were mentioning that the impact was not that much in the Gulf region, although in the slides, you say growth in all markets except the Gulf region. So there is some kind of decline. Even more, it's impressive that you reached this 13.5% growth. So can you explain that a little bit? I mean, is South Africa booming or what's happening there?

You can divide the Gulf region at the moment into two parts. One part is the part which is served to the Strait of Hormuz. And the other part, for example, Saudi Arabia, where products are shipped and delivered not to the Strait of Hormuz, but to the Red Sea or on the land transportation way.

And the only part which is affected within the Gulf is the part which is served to the Strait of Hormuz, and this is less than 1% of group sales. The rest of the Gulf region is running relatively normal. For example, in Saudi, we have growth in all 3 months also in March. But all in all, this Gulf region was down in March and in this first quarter.

Which means then the Africa region is growing 20% plus.

The rest of the Middle East, Africa region is doing very well, correct as well.

Okay. And then maybe a follow-up. You were saying that in Europe, you have not experienced a shift in demand pattern due to the Iran conflict. Nevertheless, what we also observed is that we have a boom in heat pumps. So I wonder how big the risk is that actually capacities of installers are moving away from sanitary more to heating solutions. Any comment on that?

We didn't hear anything from wholesalers or plumbers in the first 3 or 4 months with regards to heat pumps, to be honest.

The next question comes from Patrick Rafaisz from UBS.

Two follow-ups, please. The first would be on what you just described on the impact of the Strait of Hormuz. Can you add a bit more color? Is that purely a geographical impact, the less than 1% that's affected by logistics? Or is that affecting certain product groups disproportionately?

It's purely geographical.

Okay. Good. And then the second question is a follow-up on pricing and trying to understand the margin impact. I understand what you said that the price increases are here to cover higher costs and could be dilutive on the mathematical margin. But is it also fair to assume that for Q2, you still have enough safety stock of raw mats that you can cover or bridge April, May until your price increases hit so that you don't suffer an adverse effect?

So no, I think that is not true. So it's not that we have so much raw material stock that we can produce with cheap raw materials, so to say, in the second quarter. So the raw material prices will be affected in the second quarter, as we said, substantially by the increased plastic and energy prices, mid- to high single-digit increase.

However, and I think that's your question. However, the sales price impact, we only have an impact as of June. So there's a certain delay effect, which is a conscious decision. We always want to give our customers, wholesalers, also plumbers, the opportunity the to increase their prices, for example, for a project in the coming weeks. That's the reason why we have a certain delay effect, which will also impact the margin in Q2.

The next question comes from Vithushan Vijayakumar from Baader Europe.

Just coming back on the margins, please. So Q1 came in slightly ahead despite wage inflation and higher spending in IT, digitalization and marketing. I mean, should we view the Q1 gross margin performance as probably sustainable into Q2, Q3? Or was there any temporary benefits from timing mix or procurement?

And the second question would be rather on regional mix. So Europe held up well and Middle East, Africa remained rather good, so strong, while Americas stayed weak. Could you elaborate on what is driving the softness in the Americas and whether you expect this to remain a drag through 2026, please?

I take question number two. Tobias will answer question number one. In America, we have been affected by a bit of softer projects business in the first quarter. That was the main reason why sales were slightly down in the first quarter.

Question number one, Tobias, please.

As for the margins, on Q1, year-on-year, the one thing to remember is that in Q1 last year, we had a special cost for the closure of the one factory, Wesel. But if you look at the current year and sequentially, Q1 is representative in terms of cost for the rest of the year. I said there will be a ramp-up of the CHF 20 million. But margins obviously will be impacted by the said effect of pricing increases and the cost material. But as always, we're not speculating or giving any guidance on the full year outlook of the margin. But in terms of cost, nothing special to expect.

The next question comes from Alessandro Foletti from Octavian.

I have two quick questions maybe. One on the Bathroom Systems actually, which was growing in line with the Piping System. I was a little bit surprised because I thought it might be growing faster. We have had a couple of quarters with good growth there. And honestly, I thought it was due to the new shower toilet, which should be my expectation, a sustainable growth story. So I was wondering what happened there.

First of all, a general remark, don't put too much emphasis on quarterly numbers also on the product area. But behind your question, I think it's a question how is shower toilet doing? In the first quarter and shower toilet is growing very nicely. We are growing double digit in terms of sales, but also volumes.

The growth driver is still Alba, the entry-level product. Obviously, growth rates are coming down a bit now for Alba because the base is obviously growing now after 2 years having the product in the market. But also very important, our premium product is also doing very well. Mera is still growing, not double digit, but it's nicely going also in the first quarter as last year. And also Sela, the mid-level product is not cannibalized. So a very similar picture to last year, although growth rates from Alba are coming down, obviously, due to the higher base.

Right. So if I may follow up here, does it mean that the rest of your bathroom product portfolio then had, for whatever reason, a bit of a slower quarter?

No, I wouldn't say so, no.

So okay. Obviously, my estimates are wrong, but the fact that the growth rate sort of came more down is maybe more due to this base effect then?

Yes. So shower to growth rate also driven by Alba, obviously, as a group for also came down due to the higher base effect -- higher basis, sorry.

Right. Okay. And second question is really a small thing, but I saw your employees or full-time equivalents went up this quarter from 2012. Can you explain why that was the case where you are employing more people?

It's a pure volume effect with more volume, it's more people. And then part of the CHF 20 million increased cost also has the effect, but that's really the minor part. So the predominant part is the pure capacity volume effect in the plant.

Right. And with that respect, the investments you're doing in Northern Germany and Sweden for the logistics, will that have then at some point, a bigger effect on that? Or it will be more?

It will, but that's really many years out before -- I think we mentioned it will come in operation towards the end of the decade. Don't expect more people because of the before that.

The next question comes from Charlie Fehrenbach from AWP.

The price increases again, I've got the one for plastic and energy of around 2%, the copper one of 5%. I'm not sure with the ordinary price increase in April, is it 1% or 1% to 1.5?

It was 1%, but it was planned, it was a bit higher than what you originally planned.

Okay. A bit more than 1%. But it's not reasonable to add these three increases for the price increase a total of 8% or more?

No, because the 5% for the copper, don't take it on the group level.

Effect on sales in full year is 2% to 2.5%.

Exactly. You take all the three.

And my second one, you indicated for a wage inflation of 3% in the full year in March. I didn't hear anything to that. Is it still this 3%?

Absolutely.

The next question comes from Bastian Benrath-Wright from Bloomberg News.

I just have two quick questions on an event that's upon us next month, which is that, as I'm sure you're aware, there's a vote being held in Switzerland aiming to cap the population of 10 million people in June. My question is, do you expect this -- if it goes through, which the polls indicate for now, do you expect this to have any impact on your business, for example, on recruiting given that you are growing your workforce?

No, we don't think that, that will have a substantial impact if you talk specifically about recruiting because the most people we are recruiting are people already living in Switzerland and a very small part of the people which we are hiring here in Switzerland are coming directly from abroad.

Do you have -- just a quick follow-up. Do you have any sort of contingency plans? Or you just don't think those are necessary?

No, there are no contingency plans.

The next question comes from Nathalie Olof-Ors from Agence France-Presse.

I'd like to double check one thing. In March, during the annual press conference, you said the Middle East is around 3% of your turnover. So just to clarify, why did you talk about a 1% impact on the Strait of Hormuz? Well, I'm sure there's a good reason, but can you explain why you talk about 1% for the Strait of Hormuz.

And back then as well, mid-March, we were -- it was really early in the conflict, but you already mentioned back then, you had already seen a small increase in plastics. Can you explain us what happened in between -- in those 2 months? And when did you decide that a price increase was necessary? What did you see changing in the market over these last 2 months?

So the first question is, you're right, we generate in the Middle East region as a whole around 3% of sales. but only less than 1% is supplied through the Strait of Hormuz, and that's the business which is currently affected. And the rest of that region is not affected. For example, Saudi Arabia, this business is running at normal levels. It was even growing in March. That's the difference between the 3% and the less than 1%, which is mentioned in the introduction.

In terms of raw material pricing, the reason why we have now decided to increase prices was driven by the fact that raw material prices accelerated and also were not only affecting commodity plastic, they started also to affect technical plastics. So a stronger price increase of commodity plastics and also affecting the rest of the plastic assortment led to the conclusion that we need to compensate with an extraordinary price increase.

And on Saudi Arabia, you're mentioning that so far in March, the sales still held quite well in a country like Saudi Arabia where activity wasn't too much affected. But what about orders? Do you think -- is it because of the construction sites that were already started at the beginning of the conflict? And do you see demand becoming more tepid in the coming months? Did you see a decline in new orders?

Not at the moment. As I said, at the moment, they are good where projects are executed, projects are running. I don't want to speculate what might happen in 6 months, in 9 months. But at the moment, the business is going on relatively normal.

The next question comes from Harry Dow from Rothschild & Redburn.

I've got two questions. Just firstly, a follow-up on the raw materials costs. When you look at the spot commodity market for plastics and metals, I know you don't buy a lot of direct commodities, but commodity prices, I guess, will be reflected eventually in terms of your supplier increases. If the commodity prices stay as high as they are, do you think your suppliers have put through as much sort of price increases they need? Or do you think you might see more later in the year if commodity prices sort of stay where they are?

And then just secondly, on distribution costs, I think outbound freight is around maybe 3% of sales within sort of other operating costs. Do you have a sort of view on expected inflation on those sort of freight costs? And is that also reflected in the price increase?

Freight costs are going up to your second question. They are going up because of higher fuel prices. That's also the reason why we said that we increased price is energy driven because we have to account for higher freight costs also during the rest of the year due to increased fuel prices.

Can you repeat your first question? We didn't really understand the question.

The first question is just on -- when you look at sort of the spot market for commodities, I suppose you're buying raw materials from your suppliers that are buying sort of closer to spot commodity prices. Do you think the price that you're paying for raw materials in the second quarter fully reflects what you're seeing in the spot market? Or do you think there might be more price increases as you go through the year if commodity prices stay as high as they are?

No, we believe that the increased commodity prices, for example, the oil price, which has increased that this is now reflected in our forecast for the second quarter material prices, which we pay for.

The next question comes from Chase Coughlan from Van Lanschot Kempen.

Yes, I just wanted to check one thing with you regarding your second half expectations, particularly in terms of volumes. I mean, as you said in April, there's probably going to be a bit of a prebuying effect. I assume that will also continue ahead of June -- the June price increases. And then we're now in Europe, we're seeing these prospects of rate hikes. I'm just curious on, do you expect, I guess, a larger destocking effect in the second half of the year? Or could you give some color around your thoughts there?

Sorry, I can't because we don't give any outlook for our sales development with the full -- for the full year with Q1 figures only with H1 figures. So I can't give an answer about the volumes in the second half of the year.

[Operator Instructions] We have a follow-up question from Cedar Ekblom from Morgan Stanley.

I just wanted to follow up on your comment regarding growth of new products, just to check that my thinking is correct.

So if I heard correctly, you said that about 20% of your products are new product introductions and that those grow at more than 20%.

Very simple math, that implies a 4% contribution to growth at a group level, which would clearly imply that the growth of the remaining product offering is negative. I don't think that, that's necessarily consistent with some of the other comments that you've made. And so I just want to check that I'm understanding your commentary around new products and their growth rates correctly.

So what I said is that if you look at growth contribution and you divide the growth contribution into new products and old products, that the growth contribution from new products is more than 20%, but it's less than 100%. So in other words, the old products, so to say, are also growing. But new products disproportionately growing.

Okay. So 20% of your product range is new products and those account for more than 20% of the growth, so growing faster than the average, than all the rest of our product offering, but you're not going to put a number around what that actual growth rate is. So it could be a 25% contribution, it could be a 50% contribution. We just don't know what that number is.

Because I don't look into the number every quarter. That's the main reason. We look at that on a yearly basis basically.

And maybe could you give us the number for '25, if you're not looking at it sort of quarterly? Could you help us understand what the '25 contribution was to growth?

It was a significant double-digit number. I don't share the number, but it was a significant double-digit number.

Our last question is a follow-up from John Revill from Reuters.

I'm a little bit confused just about the price increase situation. So you did a normal price increase of around 1%, which came in about April. And then you've done about 5% increase for your copper-related products. That's -- and then what's happening in June? Is that a 2% rise on top of -- across the board, everything on top of that? Or what's the sort of level for the June price increase? Can you just talk us through the breakdown of how that all works again? So I'm a bit confused there.

So you're right with the first two, a regular price increase of around 1% as of April, which turned out to be a bit higher due to mix effects.

Secondly, a 5% price increase only on copper. This does not have a material impact or a large impact on group because copper is relatively small.

And we do a selective extraordinary price increase as of June, selective for certain products only, which are plastics and energy driven. But the effect of this second extraordinary price increase as of June on a group level to give you an indication of what the effect is on top line is 2% on group sales.

Right. So it's only certain products are getting price increases in June, and that's related to plastics and energy driven, but that will have around 2% group -- it's about 2% effect on group sales and overall fantastic.

Exactly. At the most -- and if you add all together, we expect for the full financial year 2026, a price effect of 2% to 2.5%.

2% to 2.5% for the year as a whole.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christian Buhl for any closing remarks.

Thank you for your participation and your questions. We all wish you a great day. Thank you.

Good morning, ladies and gentlemen, and welcome to our analysts and media conference. The presentation is structured as follows. And as usual, first, I will provide you with an overview of 2025 and present the sales development last year.

Afterwards, Tobias will present the operational and financial results of 2025. Thereafter, I will talk about the outlook of this year and summarize our presentation. And as usual, at the end of the presentation, you have the opportunity to ask questions.

Let me start with our key figures, 2025. After the significant decline of the European building construction industry since mid-2022, the market stabilized last year. In this flat market environment, we increased net sales by 4.8% in local currencies, almost entirely driven by volume growth. The EBITDA margin reached 29.4%, a slight decline versus 2024 caused by the onetime effect of the Wesel plant closure.

Excluding these planned closure costs, the EBITDA margin had reached 30.0%, an improvement of 40 basis points compared to previous year. EPS increased by 8.4%, 5% in local currencies and excluding the planned closure costs. Our strong operating results are also reflected in the industry-leading free cash flow margin of 20.8%. Simultaneously, we achieved strong results in the area of sustainability. We reduced the relative CO2 emissions by 6.9%.

And finally, the Board of Directors proposes a dividend of CHF 12.90 per share, which corresponds to an increase of CHF 0.10 per share. Let me continue with the overview of our main activities and achievements in sales and marketing last year. We again invested in our customer relationships and further increased our customer activities.

Professional customer contacts increased by 2% and reached 478,000 individual contacts. Customer trainings increased by 16% and customer participating in Geberit events even by 48%, driven by the introduction of the new installation element Duofix 4. At the same time, we also strengthened our interactions with end consumers. Based on several B2C marketing activities, we generated 114,000 new end consumer leads, an increase of 34% versus previous year.

Let me give you a few examples of other important sales and marketing activities last year. We launched the new brand and marketing concept, Mastering Water to demonstrate Geberit's core competence in guiding, controlling and using water inside buildings. This new brand and marketing concept was used for the first time at our new booth at the leading industry fair called ISH to present our entire product portfolio, including interactive displays and hands-on areas.

We welcomed a record number of 50,000 professional visitors at our booth at ISH. A third example is the extension of our digital WSC product finder with wash place products. In 2025, over 280,000 end consumers used the tool to navigate through our bathroom system product portfolio. 2025 was again marked by important product introductions. The highlight last year was the introduction of our new installation element Duofix 4.

It consists of a new frame with numerous new features, which make the installation for sanitary plumbers easier and faster. Also in the product area of installation and flushing systems, we introduced the new Sigma 40 actuator plates with a thickness of just 4 millimeter, the new plates are 3x slimmer than their predecessors to address modern and slim design requirements.

In Piping Systems, we further rolled out our Super Tube concept to our existing noise insulating drainage system, db20. The upgraded system reduces noise and saves space in mid- and high-rise buildings, thanks to optimized hydraulics. Finally, in Bathroom Systems, we further rolled out the toilet flushing technology called TurboFlush to the mid- and basic segment to enter the project business with best-in-class flushing technology.

Let me now comment on our operations last year. We continued to improve the productivity of our 26 manufacturing plants. Overall, and supported by volume growth, we increased productivity by 4.1% in 2025, driven by further automation, process improvements and the specialization of our ceramics manufacturing network. Since 2014, we have increased production productivity on average by 3% per year.

Let me now comment on our sustainability achievements last year. We reduced absolute CO2 emissions by 2.4% and relative CO2 emissions even by 6.9%. The main driver for this strong environmental performance were efficiency gains in ceramics manufacturing. Since 2015, we reduced relative CO2 emissions by 69% and absolute CO2 emissions by 55%, which we think is a very strong result.

Main drivers of the significant reduction in CO2 emissions were process improvements leading to lower energy consumption, investments in energy-efficient ceramic firing kilns and systematically increased sourcing of renewable energy. Social responsibility is another important pillar of our sustainability strategy. In 2025, we directly employed 291 full-time equivalents with disabilities.

We consciously sourced products and services in the amount of CHF 10 million from external workshops, which employ disabled or socially disadvantaged people. In total, we support around 740 disabled or socially disadvantaged people, which corresponds to approximately 6.5% of all employees. Finally, let me again give you an example of a social project that we conducted last year. In Kenya, we renovated and equipped the sanitary facilities of a local girl school with 1,200 students.

The work was carried out by Geberit apprentices and was fully financed by Geberit. Our sustainability efforts and focus on our environmental footprint and social responsibility were again recognized by many rating institutions. Among others, our commitment and sustainability results were acknowledged by Sustainalytics, ranking a great 4th out of 135 companies in the building products sector.

EcoVadis, which ranked us in the top 6% of all rated companies and MSCI, which awarded us an AA ESG rating. Let me conclude our overview with the results of the company-wide employee survey last year, a survey which we conduct every 4 years. Across all survey dimensions, survey results improved versus 2021 and exceeded the industry benchmark.

The overall results are a testament to the high satisfaction level and commitment of our employees. The best results were achieved in the dimensions, corporate social responsibility, innovation, clear and promising direction and development opportunities. After this overview, I continue now with the review of our sales development last year.

Net sales in Swiss francs reached CHF 3.16 billion, an increase of 2.5% versus previous year. In local currencies, net sales grew by 4.8%. This means we faced a negative currency effect of CHF 72 million or minus 2.3%. The increase of net sales in local currencies was almost fully driven by volumes. In light of the flat European building construction market in 2025, we consider this as a strong result.

The main reasons for this market outperformance were our undiminished market presence and sales efforts since mid-2022 when the European building construction industry started to collapse. Second, strong sales with newly introduced products; and third, the success of dedicated sales initiatives and investments outside Europe. 25% of total growth last year was driven by markets outside Europe.

Let me briefly comment on the quarterly sales development last year, which was influenced by 2 major factors. First, sales volatility in the first 3 quarters was mainly driven by the introduction of the new Duofix 4 installation system, which was rolled out in several waves. Second, Q4 was positively influenced by disproportional purchases from wholesalers in December to achieve better bonus levels.

Let me now discuss the sales development in more detail on regional level. I start with Central Europe. In Germany, net sales increased by 6% with double-digit growth in Bathroom Systems despite a still slightly declining market, driven by a still weak new build sector last year. In Switzerland, net sales grew by 1%, negatively affected by selected ForEx-related price adjustments.

Net sales in the Benelux region increased by 7%, driven by growth in both countries, Belgium and the Netherlands. In Italy, net sales were up by 2% despite a softening market with strong growth of new products. And in Austria, we also benefited from strong growth with new products and the market stabilization after 2 years of a strong decline. Let me now turn to the rest of Europe.

Net sales in Western Europe achieved previous year's level. Sales growth in Iberia and the U.K. was compensated by the market-driven sales decline in France. The market in Northern Europe stabilized after a strong decline over the last 2 years. Net sales grew by 3% with growth in all Nordic markets. Net sales in Eastern Europe increased by 4%, driven by sales growth in almost all countries, which was particularly strong in the Adriatic region.

This brings me to the markets outside Europe, which account for only 11% of sales but contributed 25% to growth last year. Outside Europe, we recorded strong growth of 25% in the Middle East, Africa region. This is the fifth year in a row in which we have achieved double-digit growth in this region. Net sales in Far East Pacific declined slightly by minus 1%. Strong growth in India was almost fully offset by the sales decline in China due to the ongoing real estate crisis. In America, net sales grew by 4%.

The Chicago Faucet portfolio delivered strong growth without major effects from tariffs. Let me now comment on the sales development per product area, again in local currencies. Net sales increased across all 3 product areas, both in Swiss franc and local currencies. Installation & Flushing Systems increased by 5% with double-digit growth outside Europe, driven by the ongoing penetration of concealed system technology.

Piping Systems increased by 3%, negatively affected by its higher exposure to the still declining new build market last year. Bathroom Systems increased by 6%, benefiting from strong growth with our shower toilet business.

For the operational and financial results, I will now hand over to Tobias.

Thank you, Christian. I will start with a general remark. All P&L result lines were significantly negatively affected by the currency development. Nevertheless, all lines of the P&L showed an improvement year-on-year. Also, the impact on margin was limited due to our strong natural hedge. Excluding the negative effect of our plant closure in Wesel, our EBITDA and EBIT margins improved.

In numbers, EBITDA increased by 2% in Swiss francs and reached CHF 931 million. In local currencies, EBITDA increased by 5.3% -- the EBITDA margin reached 29.4%. Excluding the negative margin impact of the Wesel closure of 60 basis points, the EBITDA margin would have reached 30.0% and exceeded 2024 levels. EBIT increased in Swiss francs by 0.7% and reached CHF 767 million, resulting in an EBIT margin of 24.3%.

In local currencies, EBIT increased by 4.3%. Again, excluding the negative margin impact of the plant closure of 70 basis points, the EBIT margin would have exceeded 2024 levels. Net income in Swiss franc remained stable at CHF 598 million, but increased in local currencies by 4.8% EPS was supported by the share buyback program, resulting in a disproportional high increase of 0.5%.

In local currencies and excluding the plant closure costs, EPS increased by 8.5%. Free cash flow increased by 7.4% to CHF 659 million, resulting in an increase of the free cash flow margin to 20.8%. Finally, our industry-leading return on invested capital increased slightly and reached 23.2%. I would like to give you now some more details on the negative currency effect of CHF 72 million or 2.3% on the top line last year, as mentioned by Christian.

The euro and currencies in Northern Europe, which together account for 70% of our net sales only contributed 48% of the overall top line FX effect. Most of the negative currency effect was driven by a basket of small currencies and the U.S. dollar, which significantly weakened against the Swiss franc last year. Although these currencies only account for 20% of our net sales basket, they were accountable for 52% of the negative currency effect.

Let's now review the cost position of the P&L in greater detail. Two major factors favored these. First, the currency development; second, lower direct material purchase prices. The following comments are all currency adjusted. Cost of material increased by 1.5%. We will come back to this position on the next page. Personnel expenses increased by 7.8% due to onetime costs related to the plant closure in Wesel as well as wage inflation of 3.8%.

Other operating expenses increased by 5.0%, driven notably by higher energy prices and investment in IT and digitalization. Depreciation increased by 12.8%, impacted by the plant closure in Wesel, while the amortization of intangible assets decreased by 8% -- the low cost of materials increase of 1.5% seen on the previous slide was supported by tailwind from direct -- from lower direct material prices.

In 2025, there were currency adjustments adjusted around minus 2% below those of 2024. In the fourth quarter of 2025, average direct material prices were flat versus the third quarter of 2025 and minus 2% below the fourth quarter of 2024. The personnel cost increase was only slightly driven by the number of total FTEs, which increased by nearly 1.5%. The main areas of increase were operations due to the increased volumes and sales driven by growth initiatives outside Europe and by selectively strengthening expertise in Europe.

From personnel costs, let's now turn to the marketing expenses in Swiss francs. In total, we spent CHF 88 million for marketing last year, which corresponds to 2.8% of net sales, roughly equivalent to the previous years. The slight decline in Swiss franc versus 2024 can almost fully be attributed to the strengthening of the Swiss franc. I will now comment on R&D expenditure and investments. We continued to invest in our innovation pipeline last year.

In total, we invested CHF 86 million in R&D, both as OpEx and CapEx. This represents 2.7% of net sales and is in line with previous years as well. As a result of our R&D efforts, we have filed 18 patents for upcoming product innovations. The full year EBITDA margin bridge on this page highlights the most important factors that impacted the 2025 margin.

The positive volume and product mix effect positively influenced our margins by 130 basis points. It was driven by the positive operating leverage effect and efficiency gains. The net price effect was positive, contributing to 40 basis points due to lower direct material prices. Other cost effect had a negative effect of 110 basis points, mainly driven by 3 factors: wage inflation, higher energy prices and investment in growth initiatives, IT and digitalization.

The FX effect of 20 basis points on the EBITDA margin was very limited, thanks to our strong natural hedge. Finally, the onetime costs related to the Wesel plant closure led to a minus 60 basis point decrease. In sum, this results in a slight margin decrease of minus 20 basis points. Excluding plant closures, the EBITDA margin would have increased by 40 basis points. I'm now turning to the positions below the operating profit.

Financial result decreased to minus CHF 33 million due to FX losses. The effective tax rate decreased slightly from 19% in 2024 to 18.6% in 2025. Excluding the plant closure costs and in local currencies, we achieved a net income increase of 8.1% and an EPS increase of 8.5%. The more favorable EPS development versus net income can be attributed to our continued share buyback program. Turning to the free cash flow.

This one increased by 7.4% to CHF 659 million, thanks to our strong operational performance and lower capital expenditures. This corresponds to a free cash flow margin of 20.8% and an EBITDA conversion ratio of 70.8%. Net cash flow from operating activities increased by 2.3% to CHF 867 million. Paid net capital expenditure decreased by CHF 30 million to CHF 159 million. Interest and other financing costs were almost stable compared to 2024.

I will now comment on our balance sheet at the end of 2025. Net debt decreased by CHF 196 million, mainly driven by the higher cash position. As a result, both our equity ratio and net debt-to-EBITDA ratio improved to 39% and 0.8x, respectively. The net working capital decrease was driven by timing of VAT payments. And finally, the increase in property, plant and equipment was due to continued strategic investments.

Let's review our 2025 CapEx in more detail. CapEx reached CHF 173 million or 5.5% of net sales. The investment were driven by our continuous efforts to modernize and rationalize as well as the phaseout of several multiyear investment projects. Overall, 60% of investments were dedicated to modernization and rationalization, 29% to capacity expansions and 11% to new products.

On the following page, let me give you a few examples on the investment projects that concluded last year. In Pfullendorf, we invested in 2 key projects. Firstly, we built a new modern customer training center spanning 3,500 square meters to enable state-of-the-art formats and exhibitions for a large number of customers. In total, we invested EUR 37 million over 4 years. Secondly, we in-sourced the production of Duroplast seats and Lids invested EUR 8 million over the last 2 years.

In Pune in India, we invested CHF 4 million, starting the production of drainage PE pipes for the local market. Let me now comment on the 5-year development of our industry-leading ROIC and free cash flow. We have increased the return on invested capital to 23.2%, only slightly below the 5-year average, which is positively impacted by the extraordinary high values in 2021 and 2022, driven by the COVID-19 home improvement trend at the time.

Turning to the free cash flow. Despite the market decline since mid-'22, we have a stable free cash flow generation, accumulating around CHF 3.3 billion since 2021. This corresponds to an average and high free cash flow margin of 20%. Let's turn to the dividend. For 2025, the Board of Directors proposes a dividend of CHF 12.9, an increase of CHF 0.10 or 0.8%. This is the 15th consecutive year with an increasing dividend per share.

Since the IPO in 1999, the dividend has continuously increased apart from 2001 and 2010. The payout ratio of 71% of net income is just above our policy of 50% to 70% payout corridor. This proposed dividends mean that the dividend per share has increased by 55% since 2014. We are now coming to the share buyback program. In September 2024, we started the current share buyback program with a maximum volume of CHF 300 million.

The execution period is a maximum of 2 years. Since then, and until the end of 2025, we have bought back around 229,000 shares amounting to CHF 126 million. With the current dividend proposal and the ongoing share buyback program, Geberit continues its stable and attractive distribution policy, which has been applied for many years. This attractive distribution policy is reflected in the cumulative payback to shareholders over the last 5 years.

During this period, the whole free cash flow amount of CHF 3.3 billion was paid back to shareholders via an attractive mix of dividend payments and share buybacks. In 2025 alone, we distributed CHF 503 million to shareholders through the dividend and the share buyback program. These numbers confirm Geberit's ability to consistently generate stable cash flows over an extended period even during crisis and our commitment to a shareholder-friendly distribution policy.

And with this, I hand over to Christian for the 2026 outlook.

Thank you, Tobias. Let me start our market outlook with some preliminary remarks. The outbreak of the war in Iran 2 weeks ago and the heightened geopolitical tensions significantly increased the macroeconomic uncertainties. This makes a forecast of inflation, interest rates, consumer confidence and so on, all important drivers for the construction industry, very difficult.

The following market outlook, therefore, is made under the assumption that the war in Iran has no significant impact on the macroeconomic environment and therefore, the demand for the building construction industry, except for the Middle East region. For the Middle East region, we are currently refraining from a market outlook.

However, keep in mind that we only generate 3% of our total net sales in the Middle East. The direct sales impact of the escalation in the region on the group is, therefore, limited. With these preliminary remarks, let me now start with Europe and the new build sector.

In Europe, overall building permits stabilized in the first 9 months of last year since the slightly declining nonresidential building permits were fully offset by the growth of residential building permits. Therefore, we expect after the strong decline over the last 3 years, a stabilization of the new build activities in 2026. Compared to the new build market, we expect a growing environment in the renovation sector, which accounts for around 60% of our business.

Indicators for renovations started already in the course of 2024 to improve and have continuously improved since. In particular, housing transaction increased by 11% in the first 9 months of last year, indicating a positive renovation market this year. Based on the stable new build and positive renovation market, we expect slight growth in Europe in the course of 2026. However, no broad recovery yet.

Outside Europe, we expect a mixed picture for the building construction industry. Some markets should see good demand, for example, India. Other markets will continue to decline, for example, China, due to the collapse of the new build sector in China. Let me finish our construction market outlook with a trading update for January and February. Like-for-like sales in January and February were up low single digit, somewhat negatively affected by wholesalers prebuying in December and selectively by bad weather in North Europe.

Let me finish our market outlook with an update on the direct material and energy prices. We expect a sequential increase of direct material prices in Q1 this year compared to Q4 last year. However, year-on-year to a level still below Q1 last year. Due to the continuous increase of copper prices since several months, we will implement a selective extraordinary price increase for copper piping products of 5% as of April this year.

This price increase is not related to the outbreak of the war in Iran 2 weeks ago. We took this decision already before. Energy prices are also expected to sequentially increase in Q1 compared to Q4 last year, but year-on-year also to be still below Q1 last year despite the price surge since beginning of March due to the escalation in the Middle East. Please keep in mind that our energy costs are limited and represent only 1.9% of net sales.

Thereof, we only spend 1/3 or 0.6% of net sales for natural gas. Let me now come to the Geberit outlook this year. I start, as usual, with our new product introductions. In the product area, installation and flushing systems, we will introduce customized finishes for our WC actuator plates, Sigma 40 and our urinal actuator plates, Typ 40. 50 customized finishes will allow for matching colors and materials to major faucet brands to enhance our offering for premium projects such as luxury hotels or high-end condominiums.

Another new product is the upgraded prefabrication installation system called GIS-Pro. The system increases rigidity for better transportation of prefabricated installation modules and reduces weight by 30%, all at a competitive price point. An intuitive software solution for professionals facilitates the planning of these prefabricated GIS-Pro modules.

In Bathroom Systems, we launched 3 important innovations in the area of showers this year. The first product is the CleanFloor30, a new slip-resistant shower surface available in 3 colors. The integrated hair comb and seamless surface ensures easy cleaning for the end consumer. Second, building on the well-known Duofix system, we introduced a new shower installation frame that enables up to 3x faster installation compared to conventional systems.

It is compatible with both the new CleanFloor30, but also third-party shower surfaces. The third shower novelty is the slim shower channel CleanLine30, available in stainless steel or black. The established effortless installation makes it an easy-to-install solution for installers. For end consumers, we have developed a new and easily removable hair comb that facilitates cleaning and maintenance.

Also in the area of bathroom systems, we are launching a new wash place siphon this year. Thanks to its new space-saving design, it's no longer necessary to cut out the back wall of bathroom furniture. In addition, its optimized hydraulics allow for a high flow rate, which prevents blockages. Finally, in Piping Systems, we are extending the assortment of 2 key systems that we have introduced in recent years for FlowFit and for Mapress Therm.

For FlowFit, we launched connectors to third-party systems. These connectors have several advantages, for example, allowing in a renovation setting to connect existing pipe systems in a stack with FlowFit in the floor distribution. For Mapress Therm, we are releasing union not adapters, which will allow flexible connectors with other systems and walls, which is particularly advantage in industrial applications.

Two other important initiatives this year include new marketing activities and further efforts in the area of IT and digitization. We will leverage our new state-of-the-art training and exhibition center in Pfullendorf to roll out new training and experience formats for our professional customers in Germany. Let me show you a short video about this new training center.

[Presentation]

Another second marketing focus this year are architects and designers. We will open a new Geberit experience center in Milan to showcase the design and functionality of our products in front of the wall. And finally, we will launch a new dedicated B2C marketing campaign to increase end consumer brand awareness and demand for bathroom systems, especially for shower toilets and the entry-level shower toilet Alba.

Besides marketing, we will also further invest in various IT and digitalization activities this year, specifically in AI initiatives. In total, we will increase our operational expenditures for these initiatives by CHF 20 million this year. Let me finish our outlook with our CapEx plans for 2026. Overall, we plan to invest around CHF 230 million this year. A major CapEx initiative will be in the area of logistics with 2 main projects.

The first project consists of the construction of a new greenfield logistics center in Ibbenburen, Northern Germany, as already announced last year. The purpose is to increase capacity and to mitigate risks from our existing main logistics center in Pfullendorf . The second project comprises a new distribution center in Bromolla, Sweden to consolidate and modernize our logistics activities of our ceramics business in the Nordic region.

Both logistics projects are currently in the final planning phase. Construction starts are both planned in the second half of this year with the objective to ramp up operations in 2029 to 2030. Total CapEx for both new logistics centers is estimated to be around EUR 250 million and will incur over the next 4 to 5 years. In addition to these 2 large projects, we continue to invest in our production network to address selected capacity needs and also further improve productivity.

Let me give you a few examples. We are investing in our Swiss plants, CHF 12 million until 2028 to increase the production capacity for our supply piping system, FlowFit, to cope with the ongoing strong market demand. In Langenfeld, our plant for metal pipe systems in Germany, we will commission fully automated production lines for straight metal fittings with a total investment of EUR 17 million.

The last example includes 4 fully automated pressure casting cells for wall-hung WCs and washbasins in 2 of our ceramic plants with a total investment of EUR 8 million until 2027. Let me close our presentation with a short summary. With a currency-adjusted top line growth of 5%, we achieved strong growth last year in an only flat market. These results confirm that we are successfully navigating the significant market decline of the European building construction sector over the past 3.5 years.

The strong top line was driven by our undiminished market presence and sales efforts, new product introductions and sales initiatives outside Europe. Excluding the onetime impact of the Wesel plant closure, we improved our industry-leading EBITDA margin, thanks to further efficiency improvements. This led to a strong EPS growth of 8.5%, excluding plant closure costs and currency effects.

We again focused last year on the execution of various strategic and operational initiatives. We demonstrated with an increase of free cash flow of 7% and a free cash flow margin of 21% that we generate very high and industry-leading cash flows even in a flat market environment. And finally, the employee survey proved the high level of satisfaction and commitment of our organization.

Geopolitical risks and the macroeconomic uncertainties have significantly increased since the escalation of the Middle East conflict 2 weeks ago. Under the assumption that the escalated conflict has no major impact on the macroeconomic environment, we expect in Europe overall a slight market growth. However, no broad recovery and outside Europe, a mixed picture.

We expect sequentially increased direct material and energy prices in Q1 compared to Q4 last year, however, year-on-year to a level still below Q1 last year. Our focus this year will be again on various strategic and operational initiatives, for example, the introduction of new or recently newly introduced products, several new marketing initiatives or the renewal and expansion of our logistics center. Geberit remains strongly positioned to further expand its leading market position also this year.

The fundamental success factors of our business remain a proven and stable strategy, a resilient business model, strong focus on innovation, efficiency and productivity improvements supported by continuous investments, a functional and lean organization with a high level of expertise and finally, a strong and down-to-earth corporate culture that suits our customers and is lived by motivated employees.

This is the foundation for further value creation also this year for our customers, our employees and our shareholders. With this, we are at the end of our presentation. On this slide, you see the important key dates this year, and we are now ready to answer your questions.

I have three questions, please. The first one will be on the pricing in 2026. You mentioned the 5% extra increase related to copper. How much would that be then on the group level? And at what point will you consider additional extra price actions for gas prices?

So this extraordinary price increase for copper pipe system has a positive impact, but a small positive impact on group level because the amount of sales that you generate with these copper pipe systems is not as big. To give you an indication, we don't want to disclose the number due to competitive reasons. We have CHF 1 billion sales with Pipe systems.

We have roughly 10 systems and copper is rather a smaller one. So a tick positive impact on group, but not to be overestimated. And what would it take to take further price increases? I guess this question is in the context of the last two weeks, I assume. For the moment, we have not taken any decision because, obviously, there's too much volatility and uncertainty. We have been impacted on the cost side in that first two weeks basically only on two levels.

One is energy. As I said before, we have about 0.6% of net sales, CHF 20 million cost in natural gas. There, we have an impact. And the second one is on the plastic part, which is highly correlated to oil or in other words, to commodity plastics. But the share of commodity or the cost for commodity plastic is also relative low.

We have only about 2% of net sales are related to commodity plastics, and there we have seen an impact in March. But all the rest, we have not yet seen direct impact. Therefore, it's too early to decide should we take any pricing actions or not.

Much of that is purely [indiscernible]...

So we said it's half on -- it's AI and digitization is one part. Within that, it's difficult to make a clear part, but it's a larger part of the CHF 20 million is on IT and digitalization. There's a lot of preparation work going in there, so making data AI ready. So whether that's AI or digitization, hard to say. But I would really put that into one block, IT and digitalization, which is the larger part of the CHF 20 million.

Great. And the last question is on the CapEx. You framed the 2026 outlook with the logistics centers, but it will be a 4- to 5-year project, right, the 2 logistics centers. So would you say the EUR 230 million is a good run rate for the next couple of years, or is there a reason it will go up in '27 since you only start building in H2?

So we expect EUR 230 million roughly in average for the coming years.

[indiscernible]. You said that the Middle East is about 3% of total sales. Could you give us a bit of color on your activities in that region, how many employees, factories and what kind of markets you're active in those markets? And how does that affect your supply chain as well?

So the business in the Middle East accounts to around 3% of net sales. We have about 70 sales employees in the region. We don't have any manufacturing facilities. They are largely concentrated in the Gulf region. In Dubai, we have the head office for these countries. We have also activities in Israel with people on the ground.

We don't have any sales in Iran and people since many, many years since the sanctions, so there's no business there. The actual situation in terms of supply chain is challenging, obviously. It didn't come to a standstill, but we have, especially in terms of supply chain, some challenges in terms of delays, rerouting, some freight forwarders also canceled their transportation.

So it's challenging, more difficult, but it's not at zero. And maybe a word to the activities on the ground in terms of building construction, maybe not only supply chain. Obviously, that's impacted to a certain extent, but our construction sites are operating as far as we understand. Showrooms, for example, are open, but all, of course, on maybe a little bit lower level but construction activities did not come to a standstill neither.

And do you source a lot of material from that region or that goes through these routes? What comes exactly from there?

Directly, we do not source a lot of raw material from that region. For example, the commodity plastic I mentioned before, we source from Europe. But the price impact, for example, on the commodity, that has an impact.

But on the supply side, we don't have any frictions on the supply side, we don't have any frictions at the moment. We get all our raw material. So there's no impact short term from that perspective.

Two questions. First of all, a cash flow question. You mentioned the VAT payments had an impact on net working capital. Can you provide a number here? And maybe also a number for the cash out this year for -- in relation to the Wesel plant? That's the first question.

Good. So VAT, it's a double-digit figure, but a relatively low double-digit figure. Cash out is very small in 2025. The majority will be in 2026. The bulk is the restructuring provision, which will be paid out in this year and the depreciation, which is noncash by nature.

And the next question in regard to the Wesel plant as well. As you, I think, already faced now all the costs or more or less all the costs in '25. What's the current status of this plant or maybe the positive cost effects for this year? Do we already see some productivity gains in the network for this year, or you still stick to the plan next year?

So the plant will only be closed this year. And as a result, the main benefit from that will be as of 2027. Question from the call, web call or...

Could you remind me on the price increase you plan on group level as of beginning of Q2?

How much we did or...

Yes. How much you're going to have price increase?

Around 1%.

Around about 1%. Okay. Second question would be on the share buyback program. I think as of March, you bought back, I think, some CHF 145 million, something like that. The program is around CHF 300 million ending September this year.

So do we have to expect now an acceleration of this program, or you will just end up with only CHF 200 million instead of CHF 300 million? And what do you plan for after September '26?

So we're not commenting on ongoing share buyback programs also because it's a delegated program, which works on the algorithm. And therefore, the completion rate will really be seen at the end. As for a potential follow-up, we have not yet decided on that. But if you look at our history, there's a certain likelihood that we will. But again, that has not even yet been discussed at Board level.

I've got three, and I'll take one at a time. Regarding the new products that you were talking about last year, Alba, DuoFix, I think FlowFit, there was another one, if I remember correctly. Can you talk about the sales momentum that you've seen in January, February for these products and trying to figure out whether there's a continuation of the positive momentum that we saw last year.

We see a continuous positive momentum.

Okay. But no slowdown or just above average.

So slowdown would be a contradiction to positive development. It's still going positive.

Well, it's a matter of first to second differential, right? Second question is on Germany. Just wondering what kind of market sentiment you're getting there from wholesalers and what kind of order backlogs we're looking at for installers recently?

I would say relatively unchanged and very much aligned with what we say about Germany. So a better environment this year than what we have seen last year, slightly positive, but also a clear indication that there is no broad market recovery expected this year, pretty much in line with our statements before.

Okay. And the order backlogs.

I'm sorry. The order backlogs are no new numbers. That's 10.1 weeks, if I remember correctly. That's a decline if you compare it year-on-year. That's the installer backlog you are referring to, I guess, 10.1 weeks.

Okay. And Q4 was impacted by restocking, right, ahead of the -- because they wanted to get these sales bonuses. Just wondering do we have any new indications on inventory levels at wholesalers and what their procurement plans are as of March?

To be honest, no, we don't have any indications where they are at the moment. Therefore, I can't give you a precise answer. You're referring to the slide pre buying in December due to -- since they want to reach bonus levels.

I'm not sure if I got it correctly, just for understanding the January, February sales '26 are in the low single-digit percentage range higher than...

Correct. Yes. like-for-like, low single-digit growth.

We have a couple of questions from other participants from Pujarini Ghosh, Bernstein. How should we think about the growth and margins for 2026?

We will, as usual, give a guidance for these two numbers with our H1 results.

A question from Elodie Rall from JPMorgan. What are your expectations for new products contribution in 2026 versus 2025? I know already asked, but for the overall year?

I think as every year, I must say, new products are important in terms of growth contribution. We generate around 20% of our annual net sales with new products, not launched in that year. We count new products for the last four years.

And also in terms of growth contribution, that was the case last year, we also consider this year as an important driver for growth, new products. How much it will be exactly, I don't know, but I'm sure it will be an important contributor, also referring to the still positive dynamic in January, February asked by Mr. [indiscernible] of these important new products.

And another question from Elodie Rall. Again on outlook, what is your Q1 sales expectations at this stage given weather impact mentioned and the Middle East impact?

As just said before, we said what happened in January, February. We don't comment in March, low single-digit growth, which was also partially impacted -- selectively impacted by some bad weather in the northern parts of Europe.

Next question from Jon Bell from Deutsche Bank. Can you clarify if the January, February figures is expressed in local currency terms?

Yes. Like-for-like means that we exclude currencies and also any working day effects.

And a follow-up question -- the next question from John Bell. Has there been any direct impact of the war on any of your sites?

Sites, no. Maybe that's a question coming back to before. Of the 70 employees, if that is the question, obviously, the people are mostly working from home at the moment at a little bit lower level, that's the biggest impact on our sites that the sales organizations are working from home in the region.

Okay. So I'm done so far, I think maybe some other questions from...

Maybe two more questions. One on the share buyback, you already mentioned the share, but you also had trading in your own shares, and you show a sale or sale proceeds of CHF 60 million of -- in the cash flow statement. Could you explain the rationale behind the sale of own shares?

So we're not trading our own shares. We're not making market making also. But we have an option program, and that's related to redemptions of options by employees, which leads to a positive cash inflow on our side.

Okay. And the second one would be about the contingencies. So guarantees ensure keys, they went up from CHF 130 million to almost CHF 200 million. So what was the driver behind this?

Say again?

The guarantees, inurtities in the notes of your financial statements, they went up from CHF 130 million to almost CHF 200 million. Could you explain the rationale or the driver behind the increase in the contingencies?

That's only linked to the -- there's been a new policy applied and then there's the sales increase, but there's nothing special behind that.

Two more questions from media people. First of all, Marvin, no from [ Suedkurier. ] Can you comment on the plans for Pfullendorf? Is there any plan of increase in personnel, especially after the recent opening of the new training center?

No, not structurally. The major driver of personnel in Pfullendorf is volumes, sales volumes and production volumes. And with increased volumes in production, we also need more people. But structurally, there are no plans to increase the number of people in Pfullendorf.

Okay. Then a second one from Danny Calligan from Thomson Reuters. You have given your market outlook under the assumption the conflict in the Middle East has no major impact on the macroeconomic environment. How does your outlook change in the event the conflict does have a significant impact?

That was exactly the reason why we made this disclaimer. The point is, number one is, why did we make this disclaimer. We have no expertise in macroeconomics. We have no expertise in geopolitics. Why should we think about it at all? It's important for a company like Geberit it is that we are prepared to whatever might happen.

And being prepared means that we have a clear strategy, which we will continue and that we are flexible to various scenarios. And if you're following Geberit for the last couple of years, I think we have shown that we are very flexible to react to various scenarios, and that's where we are focusing on. And I don't want to comment and speculate what could happen.

But whatever happens, I'm sure we will cope with this situation. And if you allow me a bit provocative statement, the more difficult, the more uncertain, the more challenging the world, just from a business perspective, this is somewhat positive for Geberit because that's always, to a certain extent, an opportunity.

And therefore, whatever will happen, I'm pretty sure that we will leverage this opportunity or whatever scenario might happen. And if you want to think about various scenarios, I would ask macroeconomic geopolitical experts. We are selling toilets.

And second question from Danny Calligan. How will the removal of climate reporting and certification requirements in the U.S. and amendments to EU corporate sustainability requirements affect future investments and strategy?

They will not have any impact on our investments, and I take the question -- expand the question a bit also to Europe, where all the sustainability reporting is at the moment under construction, let's say, or might change. And this will not have an impact on our investment.

It will have an impact on our reporting, of course, there we will adapt. But our sustainability strategy was not largely driven by policies or even definitely not by reporting policies. We have a very clear sustainability strategy, which we are going to execute and that will not be influenced definitely not in terms of investments by regulatory reporting changes in the U.S. or in Europe.

Okay. Then the next question from Chase Coughlan from Van Lanschot Kempen. Can you elaborate on the moving parts of the margin developments in 2026? Wage inflation is 3% plus. Pricing now is more than 1%, higher investments in IT, et cetera. Should we expect margins to be as high as 2025, excluding plant closure costs? Any color here would be very helpful.

So no outlook for the margin, of course, but the main drivers to summarize and repeat, pricing, 1% as of April, maybe a tick better due to the extraordinary copper. On the cost side, direct materials in the first quarter, still below the first quarter last year. The same is true for energy. What happens in the rest of the year, no clue.

But if it gets worse, we have the opportunity to adjust prices. And on the personnel side, wage inflation correctly, we expect around 3%. And maybe, sorry, the last one where -- which is not to be forget that we continuously work on efficiency and productivity improvements also this year, we don't have a number for that.

But as a reference, as you see in the presentation, we improved productivity every year by 3% in average in the plants. So there's no number for that, but it's obviously also important driver. with that, you can make your own equation.

Next question from Harry Dow from Rothschild & Co Redburn. When you talk to installers, if we do get more cost inflation, how much more price inflation do you think you can pass on? Is there a risk that customer affordability in the renovation market is already stretched, which makes price increases difficult, or you are confident any costs can be passed on?

The price elasticity in our industry in general is relatively low. And this has to do with the fact that we are all component suppliers. We are not selling complete bathrooms where the end consumer decides, okay, it's too expensive, I don't do it. What you are asking for is typically a building, also renovation, often a complete apartment renovation.

And that price point there you might have or you have an elasticity as a consumer. Do I do a new build if it's getting CHF 100,000 more expensive or not. But it doesn't depend directly on the component. We are contributing to it.

Therefore, we can pass on that's one part of our pricing power besides market strength and reputation and strong products. So therefore, the price elasticity specifically for our components and even more specifically for Geberit is relatively, relatively low.

Yes. Maybe you kind of answered my question already with the price increase for copper-related products. But the fact that you have now achieved an adjusted EBITDA margin of 30% already in '25. I just wonder if you take this heavily into consideration when it comes to reaction on cost inflations to do further price movements up or because you reach this upper threshold already?

I'm not sure if it's the answer what you're asking for, but we are not looking just at the number and then we are 30%, and now we have to take actions. I think the philosophy is where do we have opportunities, of course, can we pay for it also from a margin perspective. If we have opportunities, we want to invest.

The marketing initiative this year is a very good example that we spend more for marketing because we have a decent nice margin, but also at the right moment, very much linked now to shower toilets, the Alba, where we have now the right product, let's put more gas on marketing. So the key is more opportunities, creating value than just the number, are we now at 30.0% or 29.8%. Is that the answer to your question?

Yes, kind of. So maybe phrase it differently, you are not worried of a margin that could be above 30%. I don't know, due to your customers coming and saying that tops your upper band, please decrease prices.

So before we throw out money through the window to allow the margin below 30%, we will allow a margin to have a margin above 30%. We had that in the past as well. 2022, 2021, the margin was 31% driven by the strong bathroom -- COVID-induced bathroom renovation trend, but it's not a law that you're not allowed to be above 30%.

This is it. And thank you for your questions on the webcast. For the people in the room, as usual, we have prepared -- colleagues from our organization have prepared two new product introductions, which we will introduce this year. One is on the shower side and one is on the prefabrication side, which will give you a hands-on insight into these new products.

And thereafter, we will be also assort a small [indiscernible] to ensure that the margin stays below 30%. So if I may propose that we divide the room into half and then the left side, right then about 7, 8 minutes and then we will switch. Thank you for your participation.

Good morning, ladies and gentlemen, and welcome to Geberit's full year sales conference call. We will first comment on our fourth quarter sales figures, then review our full year sales performance, followed by our guidance for the operational and financial results in 2025 and finish as usual with the outlook for this year. Let me start by giving you some comments on the sales development in the last quarter.

Net sales increased by 4.4% and reached CHF 715 million in Q4 last year. The unfavorable currency development affected net sales negatively by CHF 14 million or minus 2%. In local currencies, group net sales grew by 6.4%, driven by volume growth of around 5.5% and the sales price effect of around 1%. The strong growth in the last quarter was driven by growth in almost all markets and strong support from new products.

Q4 was also a bit better than expected due to strong year-end sales driven by disproportional purchases from wholesalers in December to achieve better bonus levels. Let me now comment on the sales development in the fourth quarter in more detail. I start with the regional overview. We recorded strong growth in Central Europe with Benelux up 11%, Germany up 5% and Switzerland, Italy and Austria each up 3%.

Net sales in Northern Europe increased by 8% and in Western Europe by 4%. Both regions benefited from a weak quarter in the previous year. Eastern Europe was the only region in Europe that recorded a small sales decline of minus 1% in Q4 due to a very strong growth in Q3 of plus 15%. Outside Europe, net sales increased in Middle East/Africa by 36%, driven by a strong projects business, especially in the Gulf region, in Far East/Pacific by 17% with strong sales in India and North Southeast Asia, for example, in Vietnam, offsetting the decline in China.

In America, net sales declined by 2%, negatively affected by the U.S. government shutdown. I continue with the sales development per product area in Q4, again in local currencies. Bathroom Systems grew by 10%, Installation & Flushing Systems by 8%, while Piping Systems grew by 2%. The lower relative growth of Piping Systems was driven by the higher exposure to the new build sector.

We will now comment on the full year 2025 sales performance. Net sales in Swiss francs increased by 2.5% to CHF 3.2 billion, negatively affected by strong currency effects. Negative currency effects led to a net sales loss of CHF 72 million or minus 2.3%. In local currencies, net sales increased by 4.8%, almost fully driven by volumes as well as a slight positive sales price effect.

With an organic and currency-adjusted growth rate of 4.8%, we significantly outperformed the market development. The main reasons for our market share gain last year were, firstly, our undiminished market presence and sales efforts since mid-2022 when the European building construction industry started to collapse. Secondly, strong sales with newly introduced products such as FlowFit, Mapress Therm and the shower toilet Alba despite the unfavorable market environment.

And thirdly, the success of dedicated sales initiatives and investments outside Europe, for example, in India, Vietnam or in the Middle East region. Moving now to net sales growth per region. Again, all growth figures refer to growth in local currencies. I'll start with the review in Europe, where we achieved a sales growth of 4%. In Austria, net sales increased significantly by 8%, thanks to strong growth of our new products. In Benelux, net sales increased by 7% with growth in both countries, Belgium and Netherlands. In Germany, net sales increased by 6%, significantly better than the market. In Eastern Europe, net sales increased by 4%, supported by strong growth in the Adriatic region.

Net sales in Northern Europe increased by 3% with growth in all Nordic markets. In Italy, net sales were up by 2% in a softening new build market. In Switzerland, net sales increased by 1%, negatively affected by selective price adjustments due to the strengthening of the Swiss franc over the last years. In Western Europe, net sales were flat with strong growth in Iberia, offsetting the market decline in France.

Let me now turn to the regions outside Europe. We recorded very strong growth of plus 25% in Middle East/Africa with strong growth across the whole region. In America, net sales increased by 4% due to the strong U.S. Faucet business. In Far East/Pacific, net sales decreased slightly by minus 1% with strong growth in India and Vietnam, only partially offsetting the market decline in China. Let me now comment on the sales development by product area, again in local currencies. Bathroom Systems grew in the full year by 6%, Installation & Flushing Systems by 5% and Piping Systems by 3%.

The slightly lower relative growth of Piping Systems was driven by the higher exposure to the new build market, which was still declining last year. Let me now comment on our guidance for our 2025 operational and financial results. The EBITDA margin for the full year is expected to be slightly below 29.5%. The increased EBITDA margin guidance versus our Q3 communication was mainly driven by the slightly better-than-expected sales development in Q4.

The EBITDA margin guidance includes site closure costs of EUR 18 million for the ceramic plant closure in Wesel, all booked in 2025. The full year closure costs are unchanged from our Q3 communication beginning of November last year. The full tax rate 2025 should be around 19% and CapEx is expected at around CHF 180 million. Let me now comment on our market outlook for 2026. After the significant decline of the European building construction industry since mid-2022, the market stabilized last year.

In the course of this year, we expect a slight market growth. However, no broad demand recovery yet. In Europe, overall, building permits were flat in the first 9 months of last year since the still slightly declining nonresidential building permits were fully offset by an increase of residential building permits. This indicates a stabilization of the new build activities in 2026 after the strong decline over the last 3 years.

In the renovation sector, which accounts for around 60% of our business, we expect a positive environment as indicated by several market indicators, for example, increasing real estate transactions. Let me now turn to the regions outside Europe, where we expect a mixed picture for the building construction industry in 2026. We expect an ongoing strong demand in several markets, for example, in India or the Gulf region.

Other markets will continue to decline, for example, China, due to the collapse of the new build sector in China. After this market outlook, let me now come to the Geberit outlook and our priorities this year. In the light of the slightly improving market environment, our overarching objective remains to further strengthen our market position in 2026 with several strategic initiatives.

For example, with the introduction of new products in all 3 product areas this year or the ongoing focus on important new products successfully introduced in recent years, like the already mentioned Piping Systems, FlowFit and Mapress Therm and the shower toilet AquaClean or Duofix installation element, which we launched last year. Two other important initiatives this year include further investments in IT, digitalization and artificial intelligence.

And secondly, a new dedicated marketing initiative targeting end consumers, architects and interior designers. In total, we will increase operational expenses for these IT and marketing initiatives by CHF 20 million in 2026. A major initiative in operations this year will be the start of the expansion and renewal of our logistics capacities with 2 main projects. The first project consists of the construction of a new greenfield logistics center in Ibbenbüren, Northern Germany, as already announced last year.

The purpose is to increase capacity and to mitigate risks from our existing main logistics center in Pfullendorf. The second project comprises of a new distribution center in Bromölla, Sweden to consolidate and modernize our logistics activities for our Ceramics business in the Nordic region. Both of these large projects are currently in the final planning phase. Construction starts are both planned in the second half of this year with the objective to ramp up operations in Sweden as of 2028 and in Germany as of 2029.

Total CapEx for both new logistics centers are currently estimated to be around EUR 250 million and will incur over the next 4 to 5 years. These 2 major logistics investments will lead to higher CapEx this year of around CHF 230 million. With this, I come to our pricing this year. In terms of pricing, we will implement a regular sales price increase of around 1% as of Q2 this year. With regards to our 2 largest P&L cost positions, we expect a wage inflation of around 3% this year and a slightly increased direct material prices in Q1 compared to Q4 last year due to the recent increase of several metal prices, for example, copper.

Let me close our introduction with a short summary. With a currency adjusted top line growth of 4.8%, we achieved again a strong growth and market outperformance last year. These results confirm that we are successfully navigating through the significant market decline of the European building construction sector over the past 3.5 years and that our 2 guiding principles during this downturn, strategic stability and operational flexibility are paying off.

Our market share gains are driven by our undiminished market presence and sales efforts, new product introductions and dedicated sales initiatives outside Europe. For 2026, we expect overall demand to slightly improve. However, no broad market recovery yet. We will continue to invest this year in several sales and marketing initiatives, in innovation, efficiency and also in capacity to further strengthen our market position in and outside Europe. Thank you for your attention. We are now ready to answer your questions.

[Operator Instructions] Our first question comes from Daniela Costa from Goldman Sachs.

I have 3 but very quick follow-ups on things that you've normally -- or 2 of them on things that you normally commented out on prior quarters. But maybe I'll start one by one. On the -- can you comment a bit on inventories at distributors? What have you seen lately?

Yes. The inventories at the end of the year are a little bit higher than usual because as we said in our introduction, that wholesalers had a bit disproportionate purchases in December to achieve better bonus levels. So they're slightly higher than what they would have been normally.

And sometimes you comment on how the quarter is starting. I know it's very few working days so far, but do you have any very preliminary January daily sales views?

We only have 7 or 8 working days of this quarter. So that's really too early to comment on the quarter.

Okay. And then just on the pricing itself, you said 1%. How normally, like how dynamically can you think about this until you get to, I think, is normally the April point? Because I understand sort of you're still seeing year-on-year a tailwind from raw materials, but there's been some quite big spikes in the beginning of this year. How is it like a pricing list for the 1% they have gone through? Or do you still have flexibility to do more than that by then if the raw material situation continues to spike?

Yes, indeed, we've seen some price or cost increase on the direct material side. And as usual, we'll communicate the price increases later on with the full year.

So the 1% is not a firm number, a number you can still move?

Sorry, that was a misunderstanding. You talked about the 1% sales price increase, that's a firm number that has been implemented that is now executed. So there will no change about this 1%, if this was your question.

Yes. So if raw materials spike in the next month or 2 until the price increase take impact, you will not pass that through?

Correct. At the moment, we do not expect that raw material prices are going up so heavily that this would require an extraordinary price increase.

The next question comes from Anna Schumacher from BNP Paribas.

It's Anna Schumacher on for Paul Roger. My 2 questions are, firstly, you sound quite cautious on a European recovery despite better permit data. Is this you being conservative? Or is there something in the market that you're seeing which holds you back? And secondly, is there a reason to think local currency sales growth will decelerate versus H2 '25 this year? And is the Q4 exit rate a good indication of what to expect going forward?

Thank you for your questions. It's quite hard to understand. I didn't understand question number 2. Maybe you can repeat it. But the answer to question number one about our outlook for Europe this year. This is not a conservative outlook. This is an outlook which is based on indicators which we have, meaning the building permits, which have only stabilized last year, a certain positive environment for renovation, that's the reason why we expect only a slight growth of demand for Europe this year and no broad recovery. And question number two, sorry, we didn't understand. Can you repeat it?

Yes. So like are there any reasons to think that local currency sales growth will decelerate versus H2 '25 this year? Basically, like is the exit rate of 2025 should we think of that being the same in '26 or a bit lower?

Understood. So in terms of our guidance for our own sales figures in local currencies, we only give an outlook for that with our H1 figures. But of course, we also aim this year for market share gains.

The next question comes from Elodie Rall from JPMorgan.

I'll limit to 2. First of all, a follow-up on what you've said already in terms of cost expectations for Q1 and the 1% price increase that you are pushing from Q2, if I understood correctly. Does that mean that we should expect some margin compression in Q1 and then potentially stable margin for the full year post the price increase? So that's my first question.

And my second question is with regard to the competitive pressure that you might be seeing in the market and the market share gains that you've seen as the end market recovers. Do you see like any competitors that have dialed back capacity potentially restoring it?

Thank you for your question, Elodie. And as usual, we don't give indication on the profitability. So no guidance there, but we give you the various elements with which you can update your model. So here, no further comment from our side.

The second question with regards to competitors. We believe we have benefited from some weak competitors over the last 3.5 years when the market declined, also maybe driven by the fact that some competitors have pulled back some of their efforts in marketing and sales. Most probably, if the market becomes better and improves, we would also expect that some of these competitors are gaining back a bit their efforts. And I wouldn't call that an increasing competitive pressure, but I would expect that in a better market environment, also the activities of competitors will increase.

The next question comes from Martin Hüsler from ZKB.

Maybe first a question on some countries or regions with remarkable developments in Q4. Maybe starting with Benelux with 11.3%. Is this kind of a broad recovery that you see there, which should also to continue next year or this year?

Main reason why we had such strong growth in Q4 in Benelux was driven by the Netherlands and 2 reasons. One was also there, we had disproportionate purchases from wholesalers to achieve better bonus levels. And secondly, there were some specific sales campaigns running in the Netherlands in Q4. So I would not take the Q4 number as a predictor going forward for structural growth in the region.

And the second question of the first overall question maybe to Western Europe, which is France, U.K., also quite an improvement against the 9 months or Q3, 4.2%. Can you break this down to France and U.K.?

Yes. All of the 3 countries, Iberia is also in there. All 3 of these countries or regions were positive in Q4. However, keep in mind that Q4 in the previous year was quite weak, especially in France and also U.K. So there was also a certain base effect, which helped in Q4 2025.

And then my last question at that point is maybe a qualitative assessment on Germany. I remember that last spring, there was a rather positive sentiment driven by new government, some programs there also at the ISH. My question is now, what is your assessment today of the sentiment? If you talk to customers, wholesalers, installers, still positive or kind of a disillusion after maybe some political setbacks there?

That's a very difficult question to answer. First, what we see in the market in terms of numbers and sales, we haven't seen a big impact of this infrastructure program yet in our sales numbers and projects. On the sentiment for the soft area, I wouldn't say a disappointment, but I would say that the expectations were maybe slightly higher than what people expected 9 months or 10 months ago.

The next question comes from Arnaud Lehmann from Bank of America.

I have a couple of questions, please. Firstly, on your raw materials. Could you confirm that typically industrial metals are about 40%, and then you have about 25% related to plastic?

It's correct.

And the second question is in terms of Q4 trends, it looks like there was a bit of a deceleration in Eastern Europe. On the other hand, it looks like there was a bit of an acceleration in Western and Northern Europe. If you could please give us a bit of color on those?

I would say all of these 3 regions were affected by base effects. Eastern Europe was negatively affected by a very strong Q3. In Q3, we were growing 15%. That impacted obviously also Q4 because some of the Eastern European countries are project related, for example, Adriatic, and we had just strong project business in Q3, which led to a weaker Q4.

And as previously mentioned, in Western and Northern Europe, both, however, were benefiting from weak previous year's quarters. In Western Europe, Q4 2024 was minus 7%. And in Northern, it was minus 4%. So that was the main reason why there was certain acceleration in Q4 2025 in these 2 regions.

The next question comes from Chase Coughlan from Lanschot Kempen.

I have 2, and I'll take them one by one, please. Just to clarify on your point about the disproportionate ordering from wholesalers in Q4, does that imply that we should see a normalization in Q1 and potentially less orders there? Or how should I look at that?

I don't want to speculate about January. But as I said previously, that the inventory levels are a little bit higher end of last year than what they would have been in normal times because of this slightly disproportional purchases from wholesalers to get better bonus levels.

Okay. And then regarding the investments in digitalization and AI, can you give a bit more details on sort of where exactly these are going? Should these have cost synergies? Or is this more on a revenue synergy kind of standpoint? Or just any more color there, please?

On the marketing, it's broad-based. It's also some B2C campaign that we're planning. And on the IT and AI side, it's general infrastructure, but also various new tools, which make life of our sales force and operations easier as well, including artificial intelligence investments.

The next question comes from Yassine Touahri from On Field Investment Research.

Two questions on my side. First, could you give us a little bit more color on the bonus program that you're offering to wholesalers? How does it work? Is that if they need a specific volume quota, they get a discount on the price that they agreed. There is a price that changes depending on the volume that they achieve, it would be great if you could give us a bit more color.

And the second point is you're mentioning an increase in copper price. Is it something -- could you quantify approximately what is copper or the copper-related product as a percentage of your cost or as a percentage of your sales? And if there is any other material like nickel or steel that we should look at as well?

First question about the bonus programs or logic with wholesalers. These bonuses calculated always on a yearly basis are not only dependent on volumes. There are also other KPIs like market activities or if they keep products on stock or not. But the main driver, obviously, is volume. And there is a very simple logic, obviously, if they achieve certain volume levels or higher volume levels, they get higher bonuses.

This was the driver for that very strong year-end. Second question, how much of our raw materials are directly linked to copper in terms of percentage? Sorry, I can't give you a number. We don't know that because we don't -- we have copper in various, also semifinished products included not only as a raw material, it's even predominantly in semi-finished products. Therefore, I can't give you a sharp number in percentage, how much is driven by copper.

And what are the other key materials that we should look at? Is that steel, nickel?

Yes. The other main metals, steel, as you said, nickel, aluminum and zinc. These are the main metal -- metal raw materials driving our metal basket of direct material costs.

The next question comes from Patrick Rafaisz from UBS.

Two or 3 questions from me as well, please. Can you talk about the share of new products in this revenue mix in '25? And how should we think about the ranking in terms of growth contribution of FlowFit, Mapress, Alba and Duofix? Is that something you can qualify a bit? And then the second question would be on the CHF 20 million of expenses for marketing and digital investments.

Is that, first of all, a sustainable recurring investment? Or is there an element that will phase out in '27? And secondly, should we just assume an equal split, CHF 5 million every quarter for that? And then lastly, on the -- the third question on the wholesale pull effect and bonuses. Because you said right, in October, trading was in line with the full year plan of around 4.5%. Would you say the delta of 4.5% to 6.5%, was that a good proxy for the wholesale stocking effect?

I take question #1 and 3, and number 2 will be answered by Tobias. I start with number 3. The short answer is yes. We think that the main driver, do you hear us because we hear music. Sorry...

I guess the participant muted his line. That's why.

Okay. So again, the question about how important was this disproportionate purchases from wholesalers at the end of the year. Yes, this was the main driver. And as I said in our introduction, the reason why we were a bit better in Q4 than what we expected after we have seen October sales last year.

The first question about the share of new products, we don't have yet the exact numbers. But these new products, FlowFit, Mapress Therm, Alba were very important for growth contribution last year, and I don't want to make a ranking along these 3 products because of competitive reasons, which one was the biggest contributor and which one was the lowest contributor. And question number 2 is answered by Tobias.

So yes, the CHF 20 million, we expect them to be sustainable. So [ account ] for that as well in '27, even though there's project ending, et cetera, but that is really additional investment we're planning on the -- both on the IT and the marketing side. As for the split within the year, it's roughly equal split, but I expect less cost in Q1 and they are more spread over than the remaining quarters.

The next question comes from Christian Arnold from ODDO BHF.

Question on your pricing. Last year, you had to decrease your prices in Switzerland. Is it fair to assume that now given that the Swiss franc, euro is rather stable that we don't see another price decrease this year in Switzerland?

You are correct, but we made a lower price increase in Switzerland compared to the other countries.

Okay. Okay. Could you remind me when your price decline occurred last year from -- was it from beginning of the year or later?

Basically, we implemented as of Q2 in Switzerland, but we had this negative bonus effect already at the beginning of the year, you might remember.

Yes. Okay. Very good. And the second question would be on your CapEx plans in Germany and Sweden or the extraordinary CapEx plans here. Did I understand it correctly in Germany, we are talking here mainly about logistics, whereas in Sweden, it's also production capacities, which you are increasing?

No, this is a misunderstanding. Both projects are related only to logistics.

Okay. Very clear. And could you split it up this EUR 250 million between Sweden and Germany?

Not yet or we could, but we don't want yet because we are currently finalizing the planning phase. And once we know the exact CapEx of both individual projects, we will communicate it, but not at the moment.

[Operator Instructions] The next question comes from Harry Dow from Rothschild & Co.

I think I've got 3 questions, if that's okay. Just firstly, I think in the release, you mentioned potential for new products in 2026. I wonder whether you can give any more color there? Is it plans for sort of large announcements like Duofix, Alba again or sort of more incremental improvements in for 2026 to new products? And maybe I'll take them one by one, if that's okay.

We will have several new product introductions this year in all of the 3 product areas. We will talk about them in more detail at our full year conference, as usual, mid-March when we also can present them physically, but we have important and nice product introductions this year. And don't forget that also products we launched last year, for example, the new Duofix, which we have launched, one of the most important products we have in our portfolio, we count as an innovation, a new product this year because it's still a big effort of the sales and marketing activities this year to further penetrate this innovation, which we launched last year as well.

Great. Understood. And on bonuses to wholesalers, I was just wondering whether there has been any change last year or over the last couple of years on the amount given to wholesalers, especially the same amount of volume that's being achieved, which is whether bonuses are increasing or decreasing that you're having to give to wholesalers for certain levels of volumes.

No, there was no structural change. There was no structural change in the bonus system and don't overestimate the effect of this bonus levels. That was just the reason why it was a bit stronger in December, but this doesn't have a material impact on also our -- on our pricing last year, for example, if this is your question.

Okay. Great. And then just finally on the sort of special investments again this year. I think 2026 will be the sort of third year of these extra investments in operating costs. And I don't think you mentioned because that's just on investing when volumes are lower. Should we read maybe as the market improves, therefore, maybe in 2027 and beyond that maybe there's less need for some of these special investments beyond then? Or we should see these continue?

It is too early to answer your question. That depends then on 2027 or the end of this year when we think about our focus topics, priorities for 2027. So I can't give you yet an answer what we will do and if we might have further OpEx than in 2027 again or not.

The last question for today comes from [ Danny Kallan from Reuters. ]

This is [ Danny Kallan from Reuters. ] I have 2 questions, and I'll take them one by one, please. Firstly, I believe you are involved in reconstruction projects in Ukraine. How much progress have you seen here? And to what extent do you expect these projects to affect you and the sector in 2026?

We don't know yet how much will come in this year from this project. It's not that material for the group, to be honest. It's very important locally. But for the group, it's not that material. And I can't give you a figure how much of the project will be delivered this year already.

And then I guess following on from that, to what extent have you seen reconstruction demand in other conflict zones such as Gaza?

Gaza, we are active in Israel, but we don't have, as far as I know, yet delivered any products or sales into the Gaza region, to be honest. But I'm not in all the details involved there, sorry.

Ladies and gentlemen, this concludes today's question-and-answer session. I would now like to turn the conference back over to Christian Buhl for any closing remarks.

Thank you for your participation and your questions. We wish you all a great day. Thank you. Goodbye.

Good morning, ladies and gentlemen, and welcome to Geberit's 9-month results conference call. We will start with the third quarter figures and then comment on the 9-month development and we'll finish as usual with an outlook.

Geberit delivered strong top and bottom line results in Q3. First, net sales grew in local currencies by 5.4% despite the continued challenging market environment. Second, excluding onetime costs for the closure of the ceramics plant in Wesel, we kept operating margins stable. And third, despite these onetime costs, EPS grew currency adjusted by 6.4%. Let me now give you some comments on the sales development in the third quarter in more detail. Net sales increased in Swiss francs by 2.7% and reached CHF 783 million. The currency impact affected the top line negatively by CHF 21 million or minus 2.7%. In local currencies, group net sales increased by 5.4%, supported by a positive price effect of around 1%. Let me turn to the regional developments in the third quarter, again, in local currencies. In Europe, we achieved a sales growth of 6%, driven by significant growth in almost all European markets and the strong development of new products. Italy was the only major European market, which recorded a sales decline last quarter due to the softening new build demand.

In Middle East Africa, net sales increased by 16% in Q3, driven by strong growth in Turkey and Greece. America recorded a small sales decline of minus 2% due to wholesaler inventory rebalancing after tariff-related price adjustments in H1. Net sales in Far East Pacific declined by minus 8%, driven by the market contraction in China, partially offset by growth in India. Continuing with the sales development per product area in Q3, again, in local currencies. Installation & Flushing Systems increased by 8%, while Piping Systems and Bathroom Systems both increased by 4%. Installation & Flushing Systems benefited from the second rollout wave of the new Duofix installation system. Let me now turn to the operating and financial results in Q3. We managed to grow our bottom line results from EBITDA down to EPS, both in local currencies and in Swiss francs.

EBITDA grew by 5.3% in local currencies, and the EBITDA margin reached 30.6%. This represents a margin decrease of minus 40 basis points, driven by onetime costs of EUR 4 million related to the Wesel plant closure booked in Q3. Excluding the closure costs, the EBITDA margin would have increased slightly by 10 basis points. Net income increased in local currencies by 6.1%. Net income margin reached 19.9%. Earnings per share reached CHF 4.73 and grew in local currencies by 6.4% despite the beforementioned closure costs. Let me now continue with a review of our net sales development in the first 9 months of the year. Net sales grew in Swiss francs by 2% and reached CHF 2.4 billion. The negative currency effect led to a net sales loss of CHF 58 million or minus 2.4%. In local currencies, net sales increased by 4.4%. This growth was substantially driven by the continued strong development of new products such as the supply piping system FlowFit, Mapress Therm and the shower toilet Alba. This brings me to the regional net sales development in the first 9 months.

Again, all growth figures refer to growth in local currencies. I'll start with the review in Europe, where we achieved a sales growth of 4%, clearly above the market development. In Austria, net sales increased by 10%, thanks to growth of our new products. In Benelux, net sales increased by 6% with growth in both countries, Belgium and Netherlands. In Eastern Europe, net sales increased by 6%, supported by strong growth in the Adriatic region and Hungary. In Germany, net sales increased also by 6%, significantly better than the market. Net sales in Northern Europe increased by 2% with growth in all Nordic countries. In Italy, net sales increased by 1% in a softening new build market. In Switzerland, net sales were stable year-over-year, negatively affected by selective price adjustments due to the strengthening of the Swiss franc over the last years. In Western Europe, net sales declined by 1%, driven by a market decline in France, which was only partially offset by strong growth in Iberia. Let me now turn to the regions outside Europe.

In the Middle East and Africa region, net sales increased in the first 9 months by 22%, driven by Turkey, Greece and South Africa. In America, net sales increased by 6% due to the strong U.S. faucet business. In Far East Pacific, net sales decreased by 6% with strong growth in India, only partially offsetting the market decline in China. Let me now comment on the sales development per product area, again, in local currencies. Installation & Flushing Systems and Bathroom Systems, both increased by 5%, while Piping Systems grew by 3%. The lower relative growth of Piping Systems was driven by the higher exposure to the new build sector. I continue with the operating and financial results in the first 9 months. Currency effects as well as onetime costs related to the closure of the Wesel plant negatively impacted the operating results on all levels. We booked EUR 22 million onetime costs for the site closure in the first 9 months, which split into EUR 16 million as OpEx and EUR 6 million as depreciation. EBITDA in Swiss francs remained stable at CHF 753 million.

Excluding negative currency effects, EBITDA increased by 3.1%. The EBITDA margin reached 30.8%, decreasing by 60 basis points, which can entirely be attributed to the previously mentioned extraordinary costs of EUR 60 million related to the closure of the ceramic site in Belgium. Excluding this onetime effect, the EBITDA margin in Swiss francs would have reached 31.4%, identical to previous year's level. The positive operating leverage and slight negative price effect on the EBITDA margin were offset by 3 factors: first, a wage inflation of around 4%; second, 15% higher energy prices; and third, investments in several dedicated growth initiatives in emerging markets and additional expenditures for IT and digitalization. EBIT margin reached 25.9%, a decrease of 90 basis points, also almost entirely driven by the plant closure costs of EUR 22 million. Excluding these onetime charges, the EBIT margin would have reached 26.7%, only 10 basis points below previous year. Net income in local currencies increased by 2.7% and reached CHF 494 million, which results in a net income margin of 20.2%.

Earnings per share reached CHF 15.01, an increase of 3.2% in local currencies. If also onetime costs are excluded, EPS would have increased by 6.7% in the first 9 months versus last year. CapEx decreased by CHF 10 million or minus 10% to CHF 93 million due to varying project timings. Free cash flow increased by 8.4% to CHF 462 million due to the timing of tax payments and CapEx. Let me now comment on our market outlook for the full year 2025, which does not significantly differ from our outlook given at our H1 results communication in August this year. In Europe, we expect for the full year 2025, a slight decline in new build activity as building permits continued to decline slightly in the first half of 2025 by minus 3%. This decline is offset by a positive renovation segment this year, which contributes around 60% to Geberit sales as indicated by several indicators, for example, increased real estate transactions.

In sum, we continue to expect building construction demand in Europe to have stabilized in 2025. Outside Europe, we expect a mixed picture for the building construction industry. Strong demand is seen in several markets, for example, in India and the Gulf region. In China, on the other hand, we expect a continuation of the market decline due to the challenging residential sector. On the supply side, we expect a sideway development of direct material prices for Q4 compared to Q3. Let me now briefly comment on the Geberit priorities for the rest of the year. We will continue to have a strong focus on new products. For example, the new Duofix installation system, but also important new products introduced over the last years, like the already mentioned FlowFit, Mapress Therm and the shower Alpha. Other important initiatives this year include dedicated sales activities outside Europe, for example, in India and increased OpEx in the area of IT and digitalization, for example, for AI initiatives and digital marketing efforts.

Let me continue with our full year guidance. Due to the better-than-expected growth in Q3, we increased our top line guidance. We expect for the full year now a net sales growth in local currencies of around 4.5% Net sales in October were above previous year's level and in line with this full year top line guidance. For the EBITDA margin, we continue to expect a level of around 29%. This guidance includes EUR 18 million site closure costs, thereof EUR 16 million already booked in the first 9 months and another EUR 2 million expected to be booked in Q4. This brings me to the update on the closure of the site in Wesel for end of 2026. We have signed an agreement with the employee representatives on the social plan. The total plant closure costs in the amount of EUR 25 million are unchanged, consisting of EUR 18 million for operating expenses and EUR 7 million for depreciation. Compared to the plant closure cost estimate communicated in August, the timing of the OpEx has changed slightly with the total OpEx amount now booked already this year. As a result, we only expect a minor P&L impact of EUR 1 million depreciation related to the plant closure next year. Let me close our introduction with a short summary. Geberit delivered strong results in the first 9 months, both on the top and bottom line.

With a currency adjusted top line growth of 4.4%, we achieved a significant market outperformance in the first 9 months. Operating margins remained stable despite headwinds from a still sticky wage inflation and investments into OpEx for various strategic and operational initiatives. Earnings per share grew by 6.7%, excluding negative currency effects and planned closure costs. We consider this operationally driven EPS growth as a very strong result in this still challenging market environment. For the full year 2025, the overall market demand in Europe should stabilize and the picture overseas remains to be mixed.

Geberit is well prepared to continue its market outperformance in this environment as already demonstrated since mid-2022 when the construction markets collapsed in Europe. Our confidence is based on the fundamental need for our products, our resilient strategy and business model and our long-term focus and track record. Thank you for your attention. We are now ready to answer your questions.

[Operator Instructions]

Our first question comes from Elodie Rall from JPMorgan.

So my first question is around the estimated market share that you've delivered versus the underlying market. So I think it's around 3%, 3.5% outperformance. So can you come back on that, give us color by geography, what are the main drivers? How much of that is coming from new products?

Second, you had delivered 1% price increase more or less this year. So can you give us a hint about how you're thinking about price increases next year? And then lastly, on Eastern Europe, growth accelerated a lot. It seems in Q3 at around 15% and it was 2% in H1. So I was wondering what's driving that and how sustainable this is?

Thank you for your question. Question number one, about market outperformance. We believe we are outperforming the market across the countries, not specifically in specific regions, especially in Europe. And the main drivers are two. One is what we call strategic stability 2 or 3 years ago that we remain present in the market that we remain present with our customers. We continue to invest into our customer relations. That's one of the reasons. And number two is the mentioned new products, which are a significant contributor to the growth and market outperformance this year, as mentioned in the introduction.

Question number two, price increases 2026. We are, at the moment, finalizing the price increases, and we will communicate what we will do with the prices as usual with our first info mid-January. And question number three, the strong performance of Eastern Europe in Q3. The accelerated growth performance versus H1 where Eastern Europe was a little bit smaller in terms of growth. There are 2 drivers. One is in the first half of the year, we had a bit more tougher comps because the first half of 2024 was quite strong in Eastern Europe. That's one of the answers.

And the second part is that we have had in some of the smaller countries like Hungary or Adriatics a very strong project business. And the smaller countries are more volatile because of the project business, so the volatility plays also a role. But nevertheless, over the 9 months in Eastern Europe, we are growing 6%, which is pretty much in line with the rest of Europe, and we are very satisfied.

The next question comes from Martin Husler from ZKB.

Two at the moment. First of all, to Germany, can you maybe elaborate a bit more what you see kind of underlying trends, what you observe in the market as, I guess, building permits are likely to be a bit more positive than what you see generally in Europe. So basically, my question is, do you already see some end market demand coming from new construction? Maybe I take it one by one.

The situation in Germany is that we believe the market has stabilized in the first 9 months. Also, if we listen to our customers, that's what we hear, not a recovery, but a stabilization of the business. If you look into the building indicators, as you mentioned correctly, building permits also started to stabilize. On the residential side, even a growth over the first 8 months, January until August, residential building permits grew by 7% in Germany with a positive dynamic. However, on the nonresi side, the picture is still a bit negative. Nonresi building permits are still down around 7% in 8 months. So I would say it's a stable environment with a positive dynamic in some of the indicators, but not yet a feelable and visible recovery in the market in the first 9 months in Germany.

And then my second question on material costs in Q3 in terms of sales, actually, they have sequentially increased by roughly 110 bps, if I calculate it correctly, even though we saw raw material costs to be slightly down sequentially. So what were the major effects for an increase in Q3?

So that is largely a normal seasonality effect. If you look at last year's sequential evolution of the cost of material, it would have had exactly the same change from Q2 to Q3, and that is largely due to mix effects of the inventory during the summer holidays linked to plant closures. So mostly a seasonal effect that you're seeing here.

Okay. Now I remember that you told me that a year ago.

The next question comes from Pujarini Ghosh from Bernstein.

So on your upgraded revenue growth guidance, could you talk a little bit about what has changed? Which markets or products might be performing better that led you to upgrade the guidance? And my second question is on the price cost. So for Q3 or 9M, pricing has remained flat despite you having raised pricing by 1% in April. And on the cost side, wages have come down from Q2, but it's still up 4%. You've highlighted higher energy costs and raw materials are slightly down. So if we talk about price cost, could you talk about the different moving parts and what that implies for the price/cost spread in Q3 and how we should expect that to evolve in Q4 and going into 2026?

Thank you for your questions. I will answer number one and number two will be answered by Tobias. The main reason why we have slightly upgraded our top line guidance was the result of Q3, which was a bit better than what we expected, not a specific country, it was just across the board. Question number two, Tobias?

So there's various factors that come into that. If we start with the top line, the price effect, yes, 0 year-to-date, but 1% in Q3. That is, as explained previously, that is linked to the timing of the price increases. And therefore, it's only fully reflected in Q3. The other effect that we have is indeed the persistent wage increases, which is in Q3, around 3% and on the year-to-date, still at 3.8%. We expect, as said previously, to have a wage inflation during the year of around 3% to 4%, so fully in line with what we said previously. And the other effects that's less the price cost area are then the other cost increases, which are in line with previous guidance, so especially the sales growth initiatives, initiatives in digitalization and marketing.

The next question comes from Cedar Ekblom from Morgan Stanley.

It looks like one of the positive contributors to your top line in the quarter was the rollout of new products. I wonder if you could talk a little bit more about which product categories you've seen the most success and traction with and also where we are in the product rollout time line? How many more products should we expect to see coming to the market in the fourth quarter and then into next year? Just to try and understand how much more of a tailwind we can get from these new product introductions.

The new products played an important role in Q3 as they played an important role also in H1. And we do not plan any further new product introduction until the end of the year. We typically introduce products as of Q2 of the year. So there is nothing new to be expected. What was a bit specific in Q3 that we had the second rollout wave of the Duofix system, which supported sales in the third quarter.

The next question comes from Priyal Woolf from Jefferies.

Just 2 from me, please. So firstly, just a follow-up on pricing. So obviously, you reported 1% in Q3. Can I just check where you are with the pricing adjustments in Switzerland. I seem to recall you said that was going to be a drag for the full year. Is that no longer the case? Or actually, are we seeing better pricing elsewhere basically? And then the second question is just on the upgrade to the top line guidance for full year '25. I think it implies a sort of 5% organic growth rate in the last quarter of the year, so similar to Q3. But obviously, comparables get much easier. Is this just reflecting fewer new product rollouts as we go into the final quarter? Or are you just being conservative?

So question number one, with regards to pricing in Q3 in Switzerland, nothing changed. We implemented, as you know, selective price decreases, currency-related price decreases in Switzerland, and they have the same impact more or less on each quarter of the year, no specific in Q3. Q4 implies -- so our guidance implies a Q4 growth, which is more or less in line with the first 9 months of the 4.4%. So also that is not driven by specific new activities. It's just that we believe that we should do relatively similar than what we have seen in the first 9 months, also supported by the sales in October.

The next question comes from John Revill from Thomson Reuters.

It's just a bit more of a drill down into your raised guidance. I know, Christian, you mentioned that basically you did a lot better -- you did better in Q3 than expected. it's basically broad-based, but can you give us pick out what was behind that or a bit more -- just a bit more color on how much better Q3 than expected and what was driving that? That's the first one.

And then the second one is, I know it's very, very early days, but are there any kind of initial indications for 2026, how the construction market in Europe is looking next year? I mean, obviously, it's very preliminary, but I wondered if you had any thoughts or opinions based on permits? And is it likely to be more renovation again next year in Europe or new build or what you see next year?

So looking at the products in Q3, what was a bit better than expected was the rollout of the new Duofix system. Duofix system is quite a large part of our business. It's a large assortment, which we rolled out into 2 waves. One was in Q2 and the other one was in Q3. And it turned out that in the wave 2, customers seem to wait a bit until we were coming with the new product in Q3. So therefore, Q3 was a bit benefiting from this rollout wave #2 of Duofix systems. That was from a product perspective, the reason why we have been a bit surprised by the positive and not by the negative. And with regards to market 2026, as usual, as you know, we only will then talk about our market outlook as usual, with our first in mid of January.

The next question comes from Patrick Rafaisz from UBS.

I have a couple of follow-ups. Staying with Duofix, which you just elaborated on. Was that the last wave 2? Or will there be more to come in the future? And related to the new products, you spoke about Mapress, Alba, FlowFit for the 9 months. How did these new products evolve during Q3 versus H1? That's the first question.

So as I just mentioned, the Duofix system is a large assortment. We talk about hundreds of SKUs, and it was always a plan to roll that out in 2 waves and only 2 waves, one Q2, as I said before, and the second wave then in Q3. And as I mentioned before, we realized that customers waited somehow in Q2 for the Wave 2, which was launched in Q3. The same effect didn't happen with Wave 1 because we had the price increase as of Q2, if you remember. So there was an incentive to still buy in Q1 due to the lower prices. This was not the case from Q2 to Q3.

So that's now true. We have 100% rolled out, no effect anymore to look at in Q4. So it's important to look at the 9-month figures where we have reached a 5% growth, including now the replacement with the new Duofix systems, I think that's a good way to look at that. With the other new products, all of the 3, which we have mentioned have been growing significantly double digit, and they all 3 together contributed substantially to the growth of the 4.4% in the first 9 months.

Okay. That's clear. Then the second question would be on the EBITDA bridge. When I look at the Q3 bridge and look at the guidance, which implies a Q4 EBITDA margin that is more or less in line with the prior year, should we assume that your planned Q4 EBITDA bridge is very comparable to the Q3 one with the only difference being less dilution from closure costs. Does that make sense?

To be honest, we haven't done the bridge for Q4. But what is definitely correct is that there won't be or there will be less closure cost for Wesel. There will be only EUR 2 million compared to EUR 4 million in this quarter. The other cost effect indeed will be similar. You remember that we had the ramp-up of the EUR 20 million. So these will be comparable to Q3 indeed as it was back-end loaded compared to H1.

Price effect net on the top line pricing, we expect the same. Cost of material could be lower than in Q3 because of the seasonality effect. And I think -- and then currency effect, who knows, but that's probably as well comparable. So I guess your assumption with these few remarks I made could be relatively correct and would lead then to the around 29% we guided.

Okay. Perfect. And the last one would be just some geographic details. trying to understand the slowdown in Far East. Was that more due to China worsening versus Q2 or H1 or India slowing? And similar question to Western Europe. Can you maybe add some color on the impact from France there?

Question number one, with Far East Pacific, you're right, this was more driven by a weakening in China and not by a weakening in India. And in Western Europe, there were no specific -- the main reason was that we had a bit better business than in France also -- Q3, sorry, versus in the first half of the year.

The next question comes from Alessandro Foletti from Octavian.

Good morning everyone. Thank you for taking my questions but what I wanted to ask has been discussed. Thank you.

The next question comes from Arnaud Lehmann from Bank of America.

Two questions on my side. Firstly, starting with the big picture on volumes. You had double-digit volume decline, I think, in 2023. I think since then, cumulatively, '24, '25, you will be -- you will have recovered about half of that, about 6%. Do you think the plus 6% over the last 2 years is purely outperformance versus stable markets? Or do you think the markets have improved a little bit and there's more to go? I appreciate it's hard to be sure, but just a bit of color would be helpful. And secondly, just a follow-up on China. You mentioned that it's been getting worse in the past months. Would you consider some restructuring or capacity closure in the country, taking more of a medium-term view of the market?

First question about volume development over the last 2, 3 years. We believe that the market over the last 2, 3 years was not stable. It was obviously declining. We've just seen a stabilization this year. So the 6%, which I can't confirm [indiscernible] you just mentioned, that is a stronger outperformance versus a market which was obviously in a decline and not only stable. In China, we will make sure that the business remains to be profitable, although sales are declining. So we will adapt on a lower level, the organization just to ensure that we will remain to be profitable also in China.

The next question comes from Yassine Touahri from On Field Investment Research.

Just a question again on the volume situation. I think one of the big issues that we've seen in Europe for housing is the affordability. Do you see any -- is it something that you monitor? Do you see the government, for example, of Austria, Germany, Switzerland or Benelux trying to address these issues? And how do you think about the outlook for housing? And I think the question is coming back to the question around like where do you see the midterm if the level of activity recover, what kind of potential recovery could you see if we go back? Do you think we could go back to, let's say, like the level of activity that we saw in 2021? Would be great to get a little bit of color on your outlook for volume and the situation.

Question number one, I'm not sure if I fully understood your question. If the question was if we have seen recently activities of governments taking influence on the housing market in Europe, I would say the answer is no. We have not seen specific broad programs, which should support now the housing on a larger scale, if this was the question. And number two, on the longer term, we are still, as just mentioned before, stabilizing at a low level in Europe.

So overall, volumes are low compared obviously to what we have seen a couple of years ago. So midterm, we should see a recovery to normal housing levels because in many, many countries in Europe, there's a big shortage of housing. And with that level of activity, which we see just now, that will not be covered. Therefore, midterm, we should expect a recovery to more normal housing levels again also in Europe.

The next question comes from Remo Rosenau from Helvetische.

About AquaClean Alba, are sales developing as expected, i.e., is it going in the direction of potentially becoming a game changer as you hoped, particularly also in the field of rental flats where shower toilets never stood a chance in the past. What could you tell us about that?

So we are very happy with the development of Alba. Alba in the first 9 months has already reached 50% of all shower toilets sold. So every second shower toilet we have sold in the first 9 months is in Alba. And the positive is not only that Alba is growing nicely, it's also supporting the rest of the categories. We have also seen a double-digit growth of Mera, the premium model because Alba obviously seems to support the category. When it comes to the rental segment in your question, yes, it helps, but it's still tough to convince landlords that they should also think about the shower toilet in the rental apartments, but we have some inroads into that segment. So that also is positive what we see in the market.

Okay. And what kind of capacity reserves do you have for Alba? I mean, could you sell 2x more than now or 6x more or 10x more? Or what is your reserve?

We are prepared for even strong growth rates than what we see at the moment.

For how many years?

How many years? I don't know for how many years, to be very honest. But -- and don't forget that there are 2 big parts of the other. One is the ceramic capacity, that's one, obviously. And the other one is, so to say, the electronic unit. The electronic unit is relatively simply to ramp up capacity. That's just basically assembly. So that's not a big issue. And on the ceramic side, we have enough reserves, to be honest, I don't know for how many years, which growth rates, but I don't think that we will run into a shortage. We have not been running into a shortage this year either.

Okay. Great. Then another question, again, I'm afraid about China. Without the other markets, I mean, could you -- I mean, it was minus 6% Far East Pacific after 9 months. If you would just take China, what would the number be roughly?

Actually, I don't know, but it will be clearly positive, clearly positive. I don't know exactly what I -- maybe small double digit, but I don't have the number, to be honest.

I was interested the other way around how much China would have been down.

How much China is down? China is double digit down, sorry.

Double digit. So clearly, I mean, not only 11%, I guess...

No, no, no. Substantial double-digit number, not only.

[Operator Instructions]

The next question comes from Christian Arnold from ODDO BHF.

I apologize if you have commented on that already during your speech, I was cut off. On Switzerland, I mean, this plus 6.3% in Q3 was quite strong and significantly better than what we have seen in the first half. And I wonder what has changed in Q3 versus the first half?

Nothing specific, but Switzerland was a bit more affected from this Wave 2 rollout of Duofix, which we explained before. I don't know if you have been in the call before or have you been out, but these 2 waves were driven not by countries, but the 2 waves for the Duofix rollout were driven by products basically driven by the ramp-up capacity in the plant. And some countries have been a bit more exposed to wave 2 and others a bit less. And Switzerland was a bit more exposed to wave 2. That means that the installation and flushing system business was very strong in Q3, a little bit weak in Q2. That was the main reason why Switzerland stood out in Q3 versus H1 or Q2.

Okay. And then maybe a follow-up here. And in terms of Germany, when was the waves there?

That was broadly, I would say, no specifically, that was distributed Q2, Q3.

The next question is a follow-up from Martin Husler from ZKB.

Just a very short one. I just wonder whether in the number of employees that you show, if there are the Wesel employees included? And if we talk about roughly 300 people there?

Yes, indeed, the people in Wesel are included and order of magnitude is not wrong.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christian Buhl for any closing remarks.

So thank you for your participation. We wish you all a great day, and I guess a good day. All the best.

Thank you.

Good morning, ladies and gentlemen, and welcome to Geberit's Half Year Results Conference Call. Geberit achieved convincing results in the first half of the year. Let me start, as usual, with the three key statements for H1. First, we achieved a net sales growth of 4% in local currencies despite a continued challenging market environment. Second, excluding onetime costs for the closure of our ceramics plant in Wesel, we kept operating margin stable. And third, we achieved an EPS growth of 6% if the plant closure costs and negative currency effects are excluded.

Let me begin our review with a few comments on the top line for the first half of the year. Net sales increased by 2% to CHF 1.66 billion, negatively affected by currency effects. Negative currency effects led to a net sales loss of CHF 37 million or minus 2%. In local currencies, net sales increased by 4%, driven by growth in almost all countries in Europe and the continued strong development of new products.

The top line growth was fully driven by volumes. The sales price effect was around zero in H1 since the positive effect of the sales price increase in the second quarter was compensated by a technically driven negative price effect in Q1 and selective price adjustments in Switzerland due to the strengthening of the Swiss franc over the last years.

This brings me to the regional net sales development. All growth figures refer to growth in local currencies. In Austria, net sales increased by 10%, thanks to strong growth with our new products. In Germany, net sales grew by 6% with double-digit growth in Bathroom Systems. In Benelux, net sales grew 6% with growth in both countries, Belgium and Netherlands. In Italy, net sales were up by 3% in a softening new build market. Net sales in Eastern Europe increased by 2%, negatively affected by a strong base effect. In the Nordic countries, net sales grew by 1% with growth in all countries, excluding Norway. Switzerland and Western Europe were the only two regions in Europe, which recorded a sales decline, both by minus 3% in the first half of 2025. Switzerland was affected by selective price adjustments due to the strengthening of the Swiss franc over the last years. And Western Europe was negatively affected by a market decline in France, which was only partially offset by strong growth in Iberia.

Let me now turn to the regions outside Europe. In the Middle East, Africa region, net sales increased by 25%, driven by Turkey and South Africa. In America, net sales grew by 10% due to the strong U.S. faucet business. Net sales in Far East Pacific declined by minus 5%, driven by declines in China, partially offset by strong growth in India.

Let me now comment on the sales development per product area, again, in local currencies. Installation & Flushing Systems and Piping Systems both increased by 3%. Bathroom Systems net sales grew by 6%, driven by strong growth of our shower toilets and the U.S. faucet business.

Let me now comment on the sales development in the second quarter. Net sales declined by minus 2% and reached CHF 787 million in Q2. The negative currency effect accelerated versus the first quarter and affected the top line negatively by CHF 34 million or minus 4%. In local currencies, group net sales increased by 3% with one working day less than last year. The sales price effect in Q2 was around 0% since the positive effect of the general sales price increase as of April was still limited due to the fact that deliveries in April and even into May were mostly still on old price levels and because of the beforementioned currency-driven price adjustments in Switzerland.

Let me turn now to the regional development, again in local currencies for Q2. In Europe, net sales increased by 1%, a slight slowdown versus the first quarter due to more challenging comps in the second quarter and wholesaler rebalancing after prebuying before the April price increase. Outside Europe, net sales increased in the Middle East, Africa region by 36%, driven by very strong growth in Turkey and in America by 15%, partially due to the prebuying of customers in anticipation of tariff-related price adjustments. Net sales in Far East Pacific declined by minus 8%, driven by declines in China, partially offset by growth in India.

I continue with the sales development by product area in Q2, again in local currencies. Installation & Flushing Systems and Piping Systems both increased by 1%, while Bathroom Systems increased by 6%, driven by the strong growth of the shower toilet business and the U.S. faucet business.

I come back to the first half of the year with some comments on the operating and financial results. The negative currency effect as well as the onetime charges related to the closure of the Wesel plant led to a declining operating results in Swiss francs on all levels. We booked EUR 17 million onetime costs for the site closure in Wesel in the first half of the year. EUR 12 million on OpEx level already fully booked in Q1 and EUR 5 million on depreciation level, thereof EUR 2 million already booked in Q1 and EUR 3 million in Q2. Excluding the site closure costs and excluding negative currency effects, all bottom line results increased mid-single digits versus previous year.

Let me continue with the discussion of the EBITDA development. EBITDA in Swiss francs decreased by minus 1% to CHF 514 million in the first half of the year. Excluding negative currency effects, EBITDA increased by 2%. The EBITDA margin reached 30.9%, decreasing by 70 basis points, which can almost entirely be attributed to the already mentioned onetime operating expenses of EUR 12 million related to the closure of the ceramic plant in Wesel. Excluding this onetime effect, the EBITDA margin in Swiss francs would have reached 31.5%, only 10 basis points below previous year's level.

The positive effect from the operating leverage on the EBITDA margin was offset mainly by three factors: first, the wage inflation of 4%; second, 21% higher energy prices; and third, investments in several dedicated growth initiatives in emerging markets and additional expenditures for IT and digitalization.

EBIT margin reached 26.0% in the first half of the year, a decrease of 110 basis points, also almost entirely driven by the plant closure costs of EUR 17 million. Excluding these onetime charges, the EBIT margin would have reached 27.0%, again, only 10 basis points below previous year's level.

Net income reached CHF 339 million, a decline by minus 3%, which resulted in a net income margin of 20.3%. Earnings per share reached CHF 10.28. Excluding currency effects and excluding the site closure costs, EPS would have reached CHF 11.18, an increase of 6% versus previous year. EPS growth also benefited from our share buyback program launched in 2024.

CapEx decreased by CHF 8 million or minus 12% to CHF 55 million due to varying project timings. Free cash flow increased double digit by 14% to CHF 247 million due to timing of tax payments and CapEx.

Let me now comment on our market outlook for the full year 2025, which does not differ significantly from our outlook given at our Q1 result communication in May this year. In Europe, we still expect a slight decline in new build activity as building permits fell by 2% in 2024 and continued to decline slightly in the first quarter of 2025 by minus 3%. This decline should be offset by a positive renovation segment, which contributes around 60% to Geberit sales as indicated by several indicators, for example, increased real estate transactions. In sum, we continue to expect building construction demand in Europe to stabilize in 2025 overall.

Outside Europe, we expect a mixed picture for the building construction industry. Strong demand is forecasted in several markets, for example, in India and the Gulf region.

In China, on the other hand, we expect a continuation of the market decline due to the challenging residential sector.

The now effective U.S. tariffs are not material for the Geberit Group since the share of our U.S. business is only 3% and most of the products sold in the U.S. are also manufactured in our two plants in the U.S.

On the supply side, we expect for Q3 a sideway development of direct material prices compared to Q2.

Let me now briefly comment on the Geberit priorities this year. We will continue to have a strong focus on new products. For example, the new Duofix installation element, but also important new products introduced over the last years like FlowFit, Mapress Therm and the shower toilet Alba.

Other important initiatives this year are dedicated sales activities outside Europe, for example, in India and increased OpEx in the area of IT and digitalization, for example, for AI initiatives and digital marketing efforts.

Let me continue with our full year guidance. Despite the overall stabilizing building construction market, the short-term future is still difficult to predict due to the increased geopolitical and macroeconomic uncertainties and our general low visibility. Under the assumption of no material changes of this fragile environment, we expect for the full year net sales growth in local currencies of around 4% and an EBITDA margin of around 29%. Net sales in July were above previous year's level and grew in line with the full year top line guidance. Please also note that the full year EBITDA margin guidance of around 29% includes EUR 16 million site closure costs. Thereof EUR 12 million already booked in H1 and another EUR 4 million expected to come in H2.

This brings me to the update for the total closure costs for the site in Wesel. At this stage, we expect a total of EUR 25 million for the site closure. This is less than the previously communicated EUR 40 million. The main reasons for the reduced closure costs are lower depreciation caused by higher value of land and buildings and expected transfers of machines to other plants and an updated view on OpEx. The expected total closure cost of EUR 25 million will be fully booked in 2025 and 2026 and consists of EUR 18 million in OpEx and EUR 7 million in depreciation.

Let me close our introduction with a short summary. Geberit delivered convincing results in the first half of 2025 with a net sales growth of 4% in an overall stabilizing market environment. Operating margins were on previous year's level, excluding the onetime effect of costs related to the Wesel plant closure. This means that earnings per share, excluding closure costs and negative currency effects, grew by 6%, which we consider as a strong result in this still challenging market environment.

For 2025, we continue to expect a stabilizing market demand in Europe and the mixed environment overseas. Geberit is well prepared to continue its outperformance in this environment as already demonstrated several times in the past.

Our confidence is based on the fundamental need for our products, our resilient strategy and business model and our long-term focus and track record.

Thank you for your attention. We are now ready to answer your questions.

[Operator Instructions] The first question comes from Ghosh, Pujarini from Bernstein.

So first question on pricing. So in April, you had already started the pricing increase. But when we look at your results today and see the almost negligible pricing impact in H1 as well as Q2. for H1, we can understand it's because of the negative impact of customer bonuses and the price adjustments that you've done in Switzerland. But why is it still zero in Q2? Did you have to further cut some prices in Switzerland?

And following from that on the price/cost side. So pricing was flat and raw materials have been slightly down. leading to the net positive pricing impact. But then when we look at wage and energy inflation, could you talk about the levels of wage and energy inflation in Q2? And would that then imply negative overall price cost for Q2?

I start with the question around pricing in Q2, and Tobias will answer then the questions around wage inflation and energy cost in Q2.

The sales price effect in Q2 was still around 0%, although we increased prices by 1% technically per April. The reason why it was still only around 0% and not yet stronger positive were two. One is, as you mentioned correctly, the selective price adjustments in Switzerland due to currency. And secondly, the fact that in April and even into May, the deliveries were still made on all price levels. So order intake still until end of March, but the deliveries were still into May on the lower price level. That's the reason why if you round numbers, price effect in the second quarter was still around zero.

And wage inflation and energy will be answered by Tobias.

Wage inflation in Q2 was at 5.8%. That will be the highest level in the entire year. That is also due to certain onetime effects that are also booked in Germany with salary increases. Energy inflation in Q2 has only been slightly up a couple of percentage points. So that is not really material. However, these two points do not flow into the net price increases. These would be reflected under other costs. So that is not an impact on the 0.4% on the margin bridge.

The next question comes from Martin Flueckiger from Kepler Cheuvreux.

I've got two, and I'll step back in line afterwards. Firstly, if I understood your press release correctly, the second quarter after the announced price increase as of April 1 saw some wholesaler inventory rebalancing. Can you talk a little bit about your impression you got from your discussions with wholesalers, what their inventory management behavior is going to look like in Q3 and Q4? Any indications here would be helpful. That's my first question.

And then the second one is on the trading update for July, if you're willing to talk about that. If you could provide us with an indication as you have done over the last two quarterly results in terms of like-for-like sales growth in July, that would be helpful.

First question, indication about inventory behavior of wholesalers in the second half of the year. We don't have good insights what wholesalers will do in the second half of the year. However, what we got qualitatively as a feedback is that the inventory levels as of end of June were more or less on a normal level. So it was not still inflated by the price increase as of April, but it was also not on a lower level than normal. So at the moment, normal level, no indication what could happen in the second half of the year with the wholesaler levels.

Sales in July were up. And also like-for-like, they were in line with our full year guidance -- top line guidance of a growth of 4%. As I said before, that was also like-for-like, so adjusted for working days and currencies.

The next question comes from Christian Arnold from ODDO BHF.

On Switzerland, could you quantify the negative price effect or at least give us a kind of an indication? Are we talking here about 1%, about 5%, about 10%?

That depends on the product categories because it was a selective price adjustment. We did not do a price adjustment across the board because that dependent very much on the currency, that depends on the manufacturing location. So therefore, I can't give you that one number, but I can give you an indication that volumes were around zero in Switzerland in the first half of the year.

Okay. Then on Germany, I know you are not -- usually, you are not talking about quarterly or Q1, Q2 development on a country basis. Nevertheless, Germany is so important and the plus 5.9% were quite impressive. Yes, could you give here some color about Q1, Q2? Were there huge differences? This whole prebuying effect have a material impact? Yes, if you could give us here a little bit more color on that.

Q1 in Germany was better than Q2, also driven by the sales price increases and prebuying and rebalancing thereafter, maybe even a bit more -- a little bit more pronounced than what we have seen on a group level.

Okay. But similar kind of slightly, yes.

A little bit more dynamic than what you see on the group level in Germany.

Okay. Okay. Very good. And my last question would be you have reached focus in '25. If I compare your press release of Q1 and now today, you added one bullet point, and that is this Duofix. So maybe you can elaborate a little bit here why have you added this focus here? Is it already major or materially impacting your development in '25?

Two reasons. First of all, as you know, Duofix is one of the most important products which we have. It's in terms of share of sales, so it's a high importance. And secondly, also the internal activities are very much focused at the moment on the introduction of the new Duofix 4. It was not the intention to put that into the media release that you might believe that it had an impact on the top line, maybe if this is your question, it's more about the activities and the importance of the product.

The next question comes from Patrick Rafaisz from UBS.

A follow-up on pricing. I think you explained well the various drivers why the number was zero in Q2. But what should we then anticipate for the rest of the year? Will pricing be below the 1% because of the offsets in Switzerland, maybe 0.5 percentage point? Or do you still think 1% is the right number for the rest of the year? That's the first question.

Second question on the outlook. Bathroom Systems clearly stood out. You mentioned the prebuying in -- or the strong faucets business in America and shower toilet. Would you -- in your guidance for 4% local currency growth, does the H2 picture by product category looks similar as well to H1? Or will there be different drivers?

And then lastly, third question on this prebuying you mentioned in America. How much of a pull-forward effect do you anticipate here that we need to factor in for the second half?

Question number one about pricing outlook for the full year. So for the full year, obviously, we will not reach a 1% sales price effect due to the fact that we have around about a zero effect in the first half of the year. And also keep in mind that this negative effect from the price adjustment in Switzerland, obviously have also an impact in the second half of the year. The rest -- so the effect that we still have all the deliveries like in April and into May on all price level, obviously, that will not be the case anymore. So that will accelerate in the rest of the sales area that this price effect should become obviously clearly positive.

Second question, what are the drivers in the second half of the year for the full year top line guidance of 4%, pretty much the same drivers as what we have seen in the first half of the year. So we also expect on a full year basis that the Bathroom Systems might outperform the other two product areas.

Question number three, U.S. prebuying in anticipation of tariff-related price increases. We think that we have already seen in Q2 some of these prebuying effects because although we are manufacturing in the U.S., we also have some material which we buy from outside the U.S., which will be affected locally by tariffs. Therefore, we expect -- or we believe that already in the second quarter, we have seen some pull forward of customers in anticipation of potential tariff-related price increases.

The next question comes from Elodie Rall from JPMorgan.

My first one is on the impact from working capital in Q2. You mentioned less favorable impact in Q2. So I was wondering what your expectation is for the year together with the CapEx timing since you mentioned a bit of phasing and maybe delays. So if you could give us expectations for the year as well on CapEx.

And my second is on margins. Usually, H2 margins are seasonally lower than H1, if I'm not mistaken, but you had a lot of one-offs in H1 this year. So I was wondering if you still think the seasonality effect will be seen on margins H2 versus H1 this year?

And finally, my last question is on expectations for a European recovery. Are you still expecting in H2. So I was wondering when you see -- when you expect to see a recovery there?

I'll start with the third question about the European outlook and question #1 and 2 will be answered by Tobias.

As said in our introduction, we still expect a stabilization of the European market this year. Do we see a recovery towards the end of the year? No, it's just a stabilization. The indicators do not show that we expect on the short term a recovery. What will happen next year? We don't know yet. As usual, we'll provide you with the market outlook then beginning next year with regards to 2026.

Then coming to net working capital and CapEx. On the CapEx, the slight decrease compared to last year in H1 is purely timing related. The full year outlook remains at the CHF 180 million communicated already early in the year and therefore, on a very similar level to last year. So that is pure timing of projects, which last year were more H1 loaded. And this year, we are more H2 loaded, but there are no delays in the projects.

When it comes to net working capital, a single quarter is always a bit coincidence, what comes out, especially if you look at the net working capital from our activities. Overall, net working capital and the cash conversion cycle is very stable with us and evolves with the business activities. We have seen in Q -- in H1, overall net working capital from operating activities decreased -- or increased by CHF 5 million, but decreased from other activities. So that is net only CHF 1 million impact from net working capital in H1. And however, in Q2, the net working capital impact was larger with minus CHF 12 million and minus CHF 11 million from other activities. But again, a lot of that is pure timing related in the quarter. So if you look at the half year, which is a more meaningful period, there's basically no impact from net working capital.

The next question comes from Charlie Fehrenbach from awp.

I'm not quite sure if I missed your guess for the wage inflation in the full year.

The wage inflation for the full year remains at 3% to 4%, like stated already in Q1.

[Operator Instructions] The next question comes from Harry Dow from Rothschild & Co.

I think I've got two questions. Firstly, just on the drop-through from volumes. I think if we look at the first half, the impact from improving volumes, even if we exclude kind of the one-off plant and currency on margins was still quite small. And I think that's down to some of the operating investments in IT and sales and things. How should we think about those investments in the second half relative to the first half? Should the drop-through be higher from the improving volumes in the second half relative to the first half? And maybe as we go also into 2026, should we expect some more investments kind of in IT and sales and other things as well to think about?

And then just secondly, on the performance of new products relative to, I suppose, some of the core products in the portfolio. I don't know if you can give any color on the performance of Alba and other kind of newer products. Is that really the main driver of like-for-like? Or is there really pretty much across the board growth similar in all products?

I'll start with the second question around the new products and the Alba development. We have achieved a very good first half of the year, also a good second quarter also with Alba. Not only Alba, but also the other two important new products, Mapress Therm and FlowFit were important contributors to growth in the first half of the year. We are confident that they will do so also in the second half of the year.

Question number one will be answered by Tobias.

Of the CHF 20 million we announced for higher marketing and digitalization, et cetera, we had less than CHF 10 million in H1, and we're still expecting the CHF 20 million for the full year.

Let me also quickly come back to the second or third question of Elodie Rall, before which I did not answer on the seasonality of the margin. If you -- I mean, we communicated the one-offs of the -- linked to the closure of the Wesel plant. And excluding these, we would expect exactly the same seasonality than we have normally.

The next question comes from Remo Rosenau from Helvetische Bank.

It seems to me that in the current still quite difficult environment in the market, you are gaining quite some market share, particularly in Germany. How are actually your competitors in Germany reacting to that, like Viega or Grohe? Or are they just doing nothing here? Or is there any kind of reaction here potentially also on pricing and so on? Or what are your observations here?

I don't want to speak in detail about competitors or specific names. But there are no extraordinary reactions or, let's say, surprising reactions which we see in the market, for example, what you mentioned in terms of price wars or pressure from the pricing side, we don't see these kind of reactions.

Maybe we see that some of competitors who reduced their activities during the downturn of the last two, three years might start again to build up certain activities and also strengthening their fundamentals again. But there is nothing surprising or anything where we have now to react, which we observe at the moment, especially in Germany with regards to competitors.

Okay. Good for you. And then the -- on the plant in Germany, the closure, do I recollect it correctly that the initial number was rather EUR 40 million for the closure costs, and now it's EUR 25 million. Is that correct? And if so, what has turned out better than expected? And could you remind us on the annual savings you expect out of that?

So starting with the end of the question, the annual savings will be roughly EUR 10 million starting as of 2027. Then yes, you understood that correctly. We had previously EUR 40 million of total costs consisting of EUR 25 million OpEx and EUR 15 million depreciation. The new figure is EUR 25 million in total. And the better results are due to, on one side, higher land and building costs and also more machines being able to be transferred to other sites, therefore, decreasing the need for depreciation.

And on the other side, also a more realistic view on total OpEx costs, which consists of closure costs, retention costs, social plan, et cetera, and transfer costs. So a better overall view of the OpEx, which led to a more positive view.

We have a follow-up question from Martin Flueckiger from Kepler Cheuvreux.

Just a follow-up on the topic of energy costs. Could you, Tobias, please provide us with a guidance on how much you expect energy costs to buy into margins in 2025? That would be helpful.

So for -- we don't have a clear visibility. But for Q3, we expect roughly the same level than in Q2, which is slightly above previous year's level. But really, again, talking only a couple of percentage points in overall energy is a relatively small amount for us compared to cost of material, for example.

The last question is a follow-up from Christian Arnold from ODDO BHF.

Also on energy, I just wanted to clarify, did I hear you correct in H1, you actually had energy costs went up 21% as a whole and then in Q2, actually only slightly up?

That is correct. We had very steep energy price increases in Q1. They were at plus 36%. And therefore, easy to calculate Q2 was only slightly up. So the total is then 21% up for the half year.

We have a follow-up question from Mr. Fehrenbach from awp.

Given the flat volume development in Switzerland in the first half, can you may give kind of an outlook of the situation in Switzerland you expect in the second half year in the construction area?

I can only talk about the market, not about our volumes because we don't want to give volume outlook country by country for our sales. But in general, we are quite optimistic for Switzerland that the building construction activity should be positive and also in the second half year -- second half of the year. So we are rather positive in Switzerland than negative for the market.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Mr. Buhl for any closing remarks.

Thank you for your participation and your interest. We all wish you a great day here from Rapperswil-Jona.

Thank you.