Plumbing supplier Geberit offsets raw materials spike from Iran war

By John Revill

ZURICH, Aug 19 (Reuters) - Plumbing products maker Geberit offset the impact of the Iran conflict on raw material costs with higher prices and raised production levels, it said on Wednesday, as it beat forecasts with its second-quarter results.

Its shares were up 7% in mid-morning trading.

The Swiss company, whose products include bathroom ceramics and piping, saw materials costs rise by nearly 16% in the quarter due to higher prices for metals and plastics.

Plastic and metal prices have risen mainly because the Iran conflict disrupted energy, petrochemical, and shipping flows through the Strait of Hormuz — a critical route for industrial materials.

Despite this, Geberit boosted earnings as higher sales volumes helped it raise production levels at its factories which make piping, flushing systems and shower toilets.

PRODUCTION UP, PRICES UP

"The war in Iran and the current geopolitical tensions did not affect our business, apart from the impact on raw material and energy prices," CEO Christian Buhl said.

Geberit was benefiting from operational leverage, manufacturing higher volumes with a relatively stable cost base, Buhl said.

"If you have one machine and the machine is producing more than before, then the utilization is higher," he said. "This was not a cost-cutting exercise at all. On the contrary, costs went up, but less than volume growth."

Geberit also in April raised prices for copper piping systems and had an additional price increase of 2% from June, on top of its normal 1% increase in April.

As a result, Geberit's profit margin dipped only slightly in the three months to the end of June, while sales rose 6.6% to 838 million Swiss francs ($1 billion).

This helped the company increase core earnings (EBITDA) by 3.9% to 246.1 million francs.

In its first detailed full-year outlook, Geberit also said it expected sales to rise by 5% to 6% when measured in local currencies, and a profit margin similar to 2025 levels, and it was seeing slight market growth in Europe.

($1 = 0.8109 Swiss francs)

(Reporting by John Revill; Editing by Ludwig Burger and David Holmes)