Strong Franc Hits Swiss Toilets as Geberit's Hotel Market Slows

  • Maker of piping expects Swiss market to stagnate in 2016
  • Geberit `confident' about demand from largest market Germany

Geberit AG, a Swiss maker of urinals, forecast stagnating demand in Switzerland this year as hotels postpone bathroom improvements due to a revenue slowdown caused as the strong franc puts off tourists.

Switzerland’s tourism industry is suffering after the Swiss National Bank in January 2015 removed its cap on the currency of 1.20 per euro. Last year, demand from European guests was at its weakest in almost 60 years, with overnight stays by visitors from Europe falling nearly 10 percent, according to the Federal Statistics Office.

“We have weak demand from hotels,” Geberit Chief Executive Officer Christian Buhl said on a call with analysts and journalists. “We are not all that optimistic about growth in Switzerland, but we don’t expect a decline.”

Any decline in the local hotel trade is a blow to Geberit as Switzerland is among the top markets for its flagship shower-toilet, a hybrid model combining the benefits of a bidet and a more traditional toilet, all at the touch of a button.

Restrictions on building second homes, including holiday homes, has also damped demand in the residential sector in Switzerland, leading to “a collapse of building activity in tourist regions”, Buhl said. Switzerland, Geberit’s second-largest market, contributed about 11 percent of net sales in 2015.

Geberit said it was “confident” about construction demand this year in its largest market Germany, which generates around 30 percent of annual net sales. Shares in the maker of bathroom piping rose 2.6 percent to 363.60 Swiss francs by 11 a.m. in Zurich.

Earnings before interest, taxes, depreciation and amortization increased 13 percent to 209.2 million Swiss francs ($215.7 million) in the first three months of the year, Geberit said in a statement Thursday. That was ahead of the 201.67 million franc average estimate of analysts surveyed by Bloomberg.

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