Geberit Earnings: Pricing Power Supports Generous Capital Returns Despite Sharp Volume Decline

Wide-moat Geberit’s fiscal 2023 results confirm our investment thesis for the group. Strong pricing power and a relentless focus on productivity improvements supported generous capital returns to shareholders, despite weak demand from the construction sector. EBITDA margins expanded 310 basis points to 29.9% in a weak construction environment across Europe, evidence of its strong pricing power, which was further supported by a decline in raw material costs. Having recently revised our forecasts, following Geberit’s earnings prerelease in January, we maintain our CHF 510 fair value estimate and view shares as fairly valued.