Geberit reports Q1 beat despite end of bathroom renovation boom

© Reuters. FILE PHOTO: The logo of shower toilet and plumbing supplies maker Geberit is seen at its headquarters in Rapperswil-Jona, Switzerland October 30, 2018. REUTERS/Arnd Wiegmann

(Reuters) -Swiss plumbing supplies maker Geberit on Tuesday reported higher than expected operating cashflow in the first quarter, despite an 8.9% drop in revenue as a pandemic-related boom in home renovation ended and inflation rose.

The maker of piping and ceramic products for bathrooms, reported sales of 892.7 million Swiss francs ($996.65 million) for the first quarter, compared with 980 million francs the previous year.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped by 2.5% to 295.6 million francs in the first quarter, compared to 303.3 million francs a year earlier.

Geberit said its forecasts for the current year have not changed significantly and reiterated its expectation for a challenging environment for the construction industry in 2023.

Record-breaking inflation and higher interest rates across Geberit's core markets, as well as the end of the home improvement trend seen during the COVID-19 pandemic, have weighed on demand as consumers cut back discretionary spending.

A rise in sales prices and lower energy costs in part compensated for lower volumes and higher expenses, including increased personnel costs and raw material inflation.

Jefferies analysts said the the sales trend was poor, but the near-term focus was likely to be the profit beat.

Vontobel said EBITDA had beaten market expectations by 7%.

Its share price was up 1.6% at 0718 GMT after rising around 4% just after the market opening, making it one of the best performers on the Swiss blue-chips index.

($1 = 0.8957 Swiss francs)