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Plumbing supplier Geberit to hike prices again as costs rise
Global Banking & Finance Review®
Company
By John Revill
ZURICH (Reuters) -Geberit will raise prices again this year as it tackles “an unprecedented surge” in raw materials costs hitting the construction industry, the Swiss plumbing products maker said on Wednesday.
The company – seen as a proxy for the broader construction sector, as its products, such as bathroom ceramics and pipes, are so widely used – had already imposed one extraordinary price hike in January and an annual price rise in April.
“Due to the expected acceleration in raw materials price inflation we will implement another extraordinary price increase of an average of 7.5% as of July this year,” Chief Executive Christian Buhl told reporters.
That would come on top of the 1.5% price rise in January and the April increase of 2.5%.
Geberit said it expects the raw materials it uses to become 10% more expensive during the second quarter compared with the first three months of the year, making them 28% more expensive than a year earlier.
The company is just the latest to warn about rising costs for inputs like energy, metals and plastics. Reuters reported earlier this week that Italy plans to set aside around 7 billion euros ($7.35 billion) to help construction firms cope with spiraling costs.
Higher input costs took the shine off a near 8% rise in sales during Geberit’s first quarter, with the company’s operating profit falling 5% in the same period.
Buhl said the company was able to find the raw materials it needed to make its products, but faced difficulties.
“Every week we have a new challenge,” he said. “It’s a long list of raw materials… some smaller things like pallets, but it is really across the board.”
Still, demand remained strong in both the new build and renovation sectors, he said, despite higher prices and interest rates.
The company also plans a new share buyback programme of up to 650 million francs, to start in the third quarter at the latest.
($1 = 0.9796 Swiss francs)
(Reporting by John Revill; Editing by Michael Shields and Jan Harvey)
Price inflation refers to the rate at which the general level of prices for goods and services rises, leading to a decrease in purchasing power.
The construction industry encompasses all activities related to the building of infrastructure, including residential, commercial, and industrial projects.
Raw materials are the basic substances used in the production of goods, such as metals, plastics, and energy sources.
Corporate strategy is a company's overall plan for managing its business operations and achieving its long-term goals.
A price increase is a rise in the cost of goods or services, often due to higher production costs or inflation.
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