Geberit to raise prices to cover higher energy, plastics costs due to Iran war
Geberit's Response to Rising Costs Amid Iran Conflict
By John Revill
Price Increases Announced
ZURICH, May 5 (Reuters) - Plumbing materials and ceramic toilet maker Geberit will raise prices of plastic piping and some other products by 2% from June, it said on Tuesday, to offset rising plastics and energy costs due to the Iran conflict.
Previous and Current Price Adjustments
The Swiss company, seen as a bellwether for the broader construction sector, has already increased prices by 5% this year on copper-related products, a relatively small share of sales, on top of its usual annual increase of around 1%.
Impact of Raw Material Inflation
"We are affected by substantially higher plastics and higher energy prices," Chief Executive Christian Buhl told reporters, adding that the latest move was prompted by raw material inflation spreading beyond commodity plastics into technical plastics.
Effects of Middle East Conflict
Oil Prices and Trading Routes
Plastics prices have risen on the back of a spike in oil prices as the Middle East conflict has effectively closed key global trading route the Strait of Hormuz. However, the conflict has otherwise had little direct effect on the business, Geberit said, with shipments through the Strait of Hormuz accounting for less than 1% of group sales.
Regional Sales Performance
"The rest of the Gulf region is running relatively normally," Buhl said, adding that sales in Saudi Arabia had grown since the start of this year, including in March.
Financial Performance and Outlook
First-Quarter Results
Buhl was speaking after Geberit reported that first-quarter sales slipped 0.7% to 873 million Swiss francs ($1.11 billion), in line with analyst expectations, while EBITDA rose 2.3% to 283 million francs, ahead of the 279 million francs forecast in a Visible Alpha consensus.
Geopolitical Risks and Market View
Geberit said rising geopolitical risks made it difficult to assess the broader economic environment, including inflation, consumer sentiment and interest rates, all key for construction demand.
European Demand and Industry Impact
Still, Buhl said the company's market view was little changed from March, with European demand so far resilient and Germany expected to be stable or slightly positive.
Impact of Iran War on Demand
"We have not yet seen any direct impact from the war in Iran on demand in the building construction industry in Europe," Buhl said.
($1 = 0.7847 Swiss francs)
(Reporting by John Revill, Editing by Miranda Murray and Susan Fenton)
