Germans Not Flush Enough For Luxury ToiletsBy
German construction market shifts to low-end projects
Capacity issues for installers will take time to resolve: CE0
Geberit AG said it’s struggling to find more buyers in its key German market for high-end products, such as shower toilets that can cost more than $5,000, as a local building boom focused on multifamily homes and refugee dormitories favors simpler sanitary installations.
Companies fitting the Swiss manufacturer’s systems are so constrained with a housing bonanza that training installers and shifting focus to more lucrative luxury models remains an issue, Geberit Chief Executive Officer Christian Buhl said on a call to discuss earnings. Geberit fell as much as 8 percent on Thursday, the biggest drop since April 2015.
“The issue of the bottleneck of installers will not be resolved in the next half year,” the CEO said. “It’s more challenging for us to upsell our product portfolio if you have more lower-end projects.”
Germany’s construction boom in cities including Munich or Berlin hasn’t fed through to the most extravagant sanitary installations as many projects are designed for more frugal families as well as the 1 million refugees that have come to Germany and require a simple home. Germany is Geberit’s most important market, accounting for about a third of total revenue, and net sales failed to growth in the first six months of the year.
“As soon as the trend of over-proportional growth of accommodation for refugees is over, we’ll have less pressure against our upselling strategy in Germany,” Buhl said, adding the construction trend of multifamily buildings in big cities would continue.
Adjusted earnings before interest, taxes, amortization and depreciation decreased 7.1 percent to 216.1 million francs ($224.2 million) in the second quarter, the company said in a statement on Thursday. That missed the 229 million franc average estimate of analysts surveyed by Bloomberg.