Ladies and gentlemen, welcome to the Geberit conference call on the first information of the year 2022. I am Sandra, the Chorus Call operator. I would like to remind you that the conference is being recorded. The presentation will be followed by a Q&A session. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christian Buhl, CEO. Please go ahead, sir. Thank you for the introduction. Good morning, ladies and gentlemen. Welcome to our Geberit full year sales conference call. We will first comment on our Q4 sales figures, then review our full year sales performance, followed by our guidance for the operational and financial results in 2022, and finish with an outlook for this year. Let me start with the Q4. We had a challenging Q4. Net sales declined by -14%, negatively affected by a substantial negative currency effect of -6%. In local currencies, net sales declined by -7%. Net sales were driven by three factors. First, a positive impact of around 13% from price increases. Second, a negative effect of -2% from one working day less. Thirdly, a volume decline of around -18%. This significant volume contraction was mainly driven by two factors. First, a base effect from strong volume in the previous year due to the benefits from the COVID-19 induced home improvement trend and the stock build up of wholesalers. Secondly, destocking of wholesalers after the extraordinary strong price increases in the second half of 2022. We assume that with this strong volume decline in Q4, the majority of the excess stocks in the channel have been destocked until the end of 2022. Let me now comment on the development in the various regions in Q4. I start with Europe, where currency adjusted net sales decreased by minus 8%. Growth was achieved in the Nordics with +1%, in the Benelux and Italy with +2%, and in the UK with +18%. Single-digit net sales declines were recorded in France with -1%, in Austria with -2%, and in Switzerland and Iberia with -4%. Net sales declined by double digits in Germany with -18% and in Eastern Europe with -19%. The stronger decline in Germany and Eastern Europe was driven by a stronger base effect compared to the other European countries and the impact of the war in Ukraine on our business in Russia and Ukraine. Outside Europe, we increased net sales in Far East Pacific by +4%, supported by growth in China. Net sales were down by -6% in America and -5% in Middle East Africa. The three product areas showed, again, a different sales dynamic in the Q4. Piping systems grew currency adjusted with plus 1%, supported by a very good development of the new piping system FlowFit. Bathroom systems net sales decreased by minus 4%, negatively affected by a base effect from the COVID-19 induced home improvement trend. A decline of minus 16% was recorded in Installation and Flushing Systems, as this product area was most affected by destocking effects at wholesalers. We will now comment on the full year 2022 sales performance. Net sales in Swiss francs decreased by minus 2% to CHF 3.39 billion Swiss francs. The slight net sales decrease was driven by a substantial negative currency effect of CHF 234 million Swiss francs or minus 7%. In local currencies, net sales grew by 5%. The war in Ukraine led to a sales loss in Russia and Ukraine of around 1% of group net sales in the full year 2022. The full year sales growth of +5% was driven by strong sales price increases of around 9% and continued strong volume growth in the first half of the year. Volumes reached new record levels in the first half of the year, also due to deferred build up of inventories at wholesalers and sometimes even at installer levels in light of the extraordinary strong price increase. In the second half of the year, volumes declined sharply due to the anticipated reduction in the channel inventories. New product introduction considerably contributed to sales growth last year. For example, the new piping system FlowFit, which was rolled out to several new countries, or the new WC flushing system, Alpha, launched in the emerging markets outside Europe. Compared to pre-crisis COVID-19 levels, hence without any base effect, currency adjusted net sales in 2022 were 22% higher than in 2019. This comparison demonstrates the strong performance over the last three years. Let me now comment on full year sales in more detail, again, in local currency. In our European mature markets, we achieved an overall growth of plus 3%. Strongest growth was recorded in Italy with plus 14% after an already strong previous year. Switzerland and Netherlands grew by 4%, Austria by 3%, and Germany by 1%. The growth rate in the European expansion markets reached +6%, in line with our strategy to grow faster in these more under-penetrated markets. The strongest growth rate was recorded in the UK and Ireland with +40%. Iberia grew with +10% after an already strong growth in 2021. Net sales in Eastern Europe were up by +6% despite the war in Ukraine, which accounted for a loss of around 10% in this region. In Nordics, net sales grew by +5%, and in France by +4%. Let me now turn to the regions outside Europe. Net sales in Far East Pacific were up by +7% in 2022, substantially driven by strong growth in India and Southeast Asia, which was partially offset by a decline in China due to the lockdowns in Q2. Net sales in the Middle East and Africa region increased by 21% with growth in all major countries and regions. In Americas, net sales increased by 3%. Let me now comment on the sales development per product area. All three product areas grew 2022 in local currencies. Piping Systems grew by 11%, Bathroom Systems and Installation and Flushing Systems both by +2%. The strong development of Piping Systems versus the other two product areas was driven by stronger price increases, a solid project business and a very good development of the new FlowFit supply piping system. Bathroom Systems were affected by a stronger base effect from the home improvement trend in the previous year compared to the other two product areas. Installation and Flushing Systems were affected by stronger destocking effects. Let me now comment on our guidance for our 2022 operational and financial results. Pressure on margins in 2022 resulted primarily from massively increased raw material and energy prices. Average raw material prices peaked in May and were slightly downwards pointing since then. In Q4, currency-adjusted raw material prices declined slightly by -1% sequentially versus Q3 2022. Over the full year, prices for raw materials rose by +19%. Energy prices in Q4 were below Q3. For the full year, energy prices, however, approximately doubled compared to 2021. Due to the multilevel distribution channel in the sanitary industry, adjustments to the sales price can only be implemented with a delay, meaning it was not yet possible to compensate the higher raw material and energy prices in the full year period of 2022. Accordingly, we expect an EBITDA margin of around 27% for 2022. Due to an extraordinary one-time impact, we expect an extraordinary low tax rate in the single digit range. The reason for this low tax rate is a one-time impact of transitional measures in connection with the Swiss tax reform. This will also significantly impact 2022 net income and EPS. We expect a positive one-time impact of around +10% on net income and EPS. CapEx for the full year is expected to be around CHF 160 million. Before I come to the current business, let me briefly update you on our share buyback program. In total, we bought back 1,109,000 shares for a total amount of CHF 570 million last year. This means that we distributed, together with the dividend payment, CHF 1 billion to shareholders in 2022. This corresponds to around 6% of the market capitalization of Geberit per end of the year. Let me now comment on our outlook for the building construction industry and Geberit in 2023. Due to the ongoing geopolitical and macroeconomic uncertainties and risks, we expect overall a challenging environment for the building construction industry in 2023. Challenges for the sanitary industry emerge from potential pull-forward effects from the COVID-19 induced home improvement trend over the last years. Secondly, from the increased interest rate environment, although it is important to note that many macroeconomic forecasts expect a stabilization, maybe even a declining interest rate environment as of Q2 or Q3 this year. A third challenge comes from the shift from sanitary to heating solutions, mainly to heat pumps. However, keep in mind that this effect has also limitations due to the ongoing supply chain constraints for specific components in the heating segment and the fact that only a limited number of Geberit markets are affected. Positive catalysts for the sanitary construction market emerge from the fundamental need for renovation and for new housing in several European countries. For example, in Germany, with a market requirement of around 400,000 new residential units per year and the upcoming renovation cycle from the last strong building boom in the 1990s. A second market catalyst is the structural trend to better sanitary standards, for example, in the context of the demographic change in many European countries. Outside Europe, we expect a quite positive market environment in several emerging markets, for example, in India or in the Gulf region. In the context of this challenging market environment, we defined for Geberit two guiding principles for 2023. First, strategic stability, second, operational flexibility. The purpose of these principles is to manage volume uncertainties without harming the midterm potential of the company. Short-term volume challenges emerge from the still existing, however, significantly reduced excess stocks in the channel. As mentioned before, we assume that the majority of the excess stocks in the channel has been destocked, and there is only a smaller part remaining. The overarching target this year is to gain further market shares regardless of the prevailing market environment. To do so, we will focus on several levers and initiatives. Let me give you three examples. First, we will strongly focus on new product introductions, which proved to be an important contributor to growth over the last years. For example, the new supply piping system Geberit FlowFit or the new conceived WC flushing system Alpha. The second example is our focus this year on the full WC system to further penetrate the concealed system technology and to promote our best-in-class WC flushing performance. A third example of our market share initiative this year is prefabrication. We will put a stronger emphasis on our prefabrication business in the DACH region to offer efficient solutions, while at the same time addressing the bottleneck of qualified installers. On top of our efforts to gain market shares, top line in 2023 will benefit from a positive price effect of around 6%-7% due to the various sales price increases throughout last year and at the beginning of this year. On the cost side, we expect a wage inflation of around 5%-6% for the full year 2023, and raw material prices in Q1 to be on the level of Q4 last year. Let me close our introduction with a short summary. Despite the record results in the previous year, Geberit recorded a further sales growth in local currencies. The year was marked by the end of the COVID-19 crisis and historical high inflation, leading both to unprecedented stocking effects in our distribution channel. For 2023, we expect again a challenging market environment. However, we believe Geberit is very well prepared to also master the uncertainties emerging from this environment, as already demonstrated several times during the past. Our confidence is based on the fundamental need for our products, our resilient strategy and business model, and our long-term focus and track record. Based on these fundamentals, we are also convinced to continue to achieve our midterm targets of an average annual net sales growth in local currencies of 4%-6% and an average EBITDA margin level between 28% and 30%. Thank you for your attention. We are now ready to answer your questions. We will now begin the question-and-answer session. Anyone who wishes to ask a question or make a comment may press star 1 on the touch-tone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star 2. Participants are requested to use only hands when asking a question. Anyone with a question may press star 1 at this time. The first question comes from Daniela Costa from Goldman Sachs. Please go ahead. Hi. Good morning. I have 3 questions if it's possible. Thanks for taking them. The first one, just wanted to ask you regarding your annual April price increase, if you have decided on whether you're gonna move ahead with that one or not this year, if you know already. The second one related to how you purchase raw materials and energy. If you can you give us any color if you have the ability to go on spot, let's say, now that gas prices have declined significantly? Are you tied into contracts in some sense, or can you just be nimble and purchase on spot? If we were to just look at spot now, I know you gave the helpful reference of 1 Q versus Q4, but can you talk about if everything just freezed now, what would be the tailwind in 2022 from raw materials and energy? My final question relates to the capital allocation. You mentioned this 10% impact in net income and in EPS. Shall we think about sort of a reflection of that in the dividend this year? Related to that, are you accelerating the buyback like you did in Q3? Thank you. Thank you for your questions. Number one, we have not yet decided if we will implement the net price increase as of April this year. Second question, no change in terms of buying patterns for raw materials. However, for energy, there is a change. Last year, we have still 20% of our energy exposure hedged due to longer term contracts. This will now come into the spot market, which means we have 100% at the moment exposed more or less of our energy exposure to the spot market. Question number three will be answered by Tobias. The tax effect to dividends has not yet been decided by the board. Very clear. Thank you. The next question comes from Georges Spee from BNP Paribas. Please go ahead. Morning, gentlemen. Thanks for taking my question. Just on margins, given the sharp reversal in input costs and the delayed impacts of the sequential price increases, is there any risk of exceeding your medium-term guidance in 2023? If, if you did, how would you think about pricing in that scenario? Would you give anything back to customers? We will not comment on our margin expectations at this point in time for the year. We will only with H1 results, give a guide for our APA margins. I can't give you a precise answer. In terms of pricing, at the moment in this environment, we do not foresee or plan for any price reductions. Okay. That's really clear. Maybe just another question on volumes. Clearly, new residential indicators in Europe have been pretty weak over the last few months. Can you give us a sense of how reactive the installers are to that, those indicators or the slowdown? Do they buy less, less stock in anticipation of lower demand, or is it all very last minute? I'm not sure if I 100% understood your question. The negative volume demand on our side was not driven by much stronger, sorry, much weaker demand. It was mainly driven by de-stocking effects of wholesalers. Okay. Do you have a sense of the underlying demand with the installers, though? Underlying demand. We don't have, no, because we don't have a real... We have a sense, of course. Demand was not as weak as what we have seen in the volumes for Geberit second half of the year, but it's very difficult to quantify. The majority of the decline which we have seen at Geberit was driven by de-stocking. Okay, that's clear. Thank you. The next question comes from Martin Hüsler from ZKB. Please go ahead. Good morning. Thank you for taking my question. First of all, I wanted to ask you if you were surprised negatively by the volume development in the last quarter, so this -18, or did you have this in your calculations when you gave your margin guidance of 27% with the Q3 numbers? We have not been surprised by the volumes in the Q4. That was part of our scenarios. However, it was, we're rather at the low end of our expectations, the minus 18%. The fact that you can now reconfirm your margin guidance, does this mean that we have to see also some positives that you that maybe are not so visible, so maybe that the price impact was stronger that you were expecting? Was your margin guidance of 27% before rather a very cautious guidance? Neither nor. The price effect was exactly on the level that we internally forecasted. I think the margin is a testimony to our operational flexibility that we're able to show. We really managed to drive costs down at the same pace as volumes and therefore maintain our margin on these very high levels. Okay. Maybe the last one. I remember that in the Q3 comments or Q&A, you were citing some markets where you said that we don't see that huge de-stocking, so the underlying demand is better reflected in the sales development. Could you remind us in which market these were, also in Q4, and maybe then we get a better feeling on how underlying demand really was? These two exceptions were and are Italy and Switzerland, where we have seen less stocking effects throughout the year. In Italy, driven by structural market effects. We have a much more fragmented distributor landscape, much more smaller distributors, less stocking effects. In Switzerland, the price increases were lower than compared to other countries, leading to less stocking effects. That also prevailed in Q4. Okay, thanks a lot. The next question comes from Andrey Kuklin from Credit Suisse. Please go ahead. Good morning. Thank you very much for taking my question. I just wanted to come back to your comment on the de-stock being largely complete now. Could you talk about what gives you confidence in that? If you're confident in that, why can you not quantify the impact of the de-stock in Q4? Confidence and quantity is not the same. The confidence comes from the source of this information, which is basically our distributors telling us qualitatively that the majority of these excess stocks have been de-stocked. There's only a minor part left. That is also the answer to your second part. As I explained several times over the last couple of quarters, we can't quantify it because these wholesalers do not share these numbers with us about their inventory level. Got it. Thank you. That's very helpful. Is there any way to tell the size of the impact from the shift to heating? No. approximate or ballpark? No. That's the same. That's even more complicated, more challenging, because this shift basically happens at the end consumer or maybe at the plumber, you could argue. There we don't have any sales relationship, as you know. Therefore, it's even more difficult to quantify any shift effects from sanitary to heating, which is only taking place, as you know, in a couple of countries, not across Europe. Yes. Yeah. Thank you. I appreciate that. Just on energy costs, if we assume current spot rates prevail, what would that do to your energy bill for 2023 versus 2022, please? I don't wanna speculate because energy prices are so highly volatile. Even that, say it was part of consideration, I think is relatively, I wouldn't say dangerous, but not really meaningful. It's so highly volatile. As I said, we expect that energy prices last year overall will have doubled versus 2021. That will mean that we have a little bit more than 3% of net sales last year as energy costs. Okay. in Q3 and Q4, your energy costs were up, I guess, four times in Q3 and a bit less than that in Q4? In Q4, we don't have yet the numbers. That's the reason why we can't give you already the numbers, but we don't have them, but they were substantially lower than in Q3 as we also guided for with our Q3 results, but we don't have yet the number. Great. Thank you for your time. The next question comes from Martin Flückiger from Kepler Cheuvreux. Please go ahead. Morning, gentlemen. Thanks for taking my question. I've actually got two. First one is a clarification question. Did I understand you correctly that you're now including this one-off tax rate impact, that you're now guiding for CHF 160 million net income? If you could confirm or clarify that's my first question. The second one is, if I've heard everything that you've said so far, you haven't been talking about the Shower Toilets business yet. Could you make some comments on how that business performed in Q4 and how much that was affected by de-stocking effects? Number two, I start with number two, Tobias will answer number one. The Shower Toilets business was going well last year. However, we have not been growing. We were more or less on previous years' level. That is very much driven by strong growth in the two previous years, driven by COVID-19. We are on a very high level, stable with our Shower Toilets business last year. Question number one, Tobias. At that stage, we don't make any reference to net income. Could it be that you mixing up with the CapEx figure, the CHF 160 that we mentioned? That would be in that case totally unrelated to the tax effect. Great. Thanks. Just on the Shower Toilets business, what about the de-stocking effects in Shower Toilets? Did you see that as well in that, in that business, or was there a difference? I would argue, I would assume not to the same extent as what we have seen, for example, for Installation and Flushing Systems. At a lower extent, most probably. Thanks. The next question comes from Arnaud Lehmann from Bank of America. Please go ahead. Thank you very much. Good morning, gentlemen. Both my questions are about the 2023 outlook comment, and I'll just talk about market subsidy at this stage. You said it's gonna be challenging. Would you mind giving us a little bit of color, firstly, by divisions, when you think about the professional side of your business, Piping Systems, Flushing Systems, relative to the more consumer side, the Bathroom Systems, where do you think there is more risk or more upside? The second question is the same at country level. Based on what you've seen recently, where do you think there is in your markets? Is it the Nordics? Is it Germany? At the same time, where do you feel more confident about some stabilization in markets? Thank you. I think the picture across the three base product areas is not massively different. One effect might be a difference that the base effect from this COVID-19 induced home improvement trend will be stronger on the Bathroom System because this is the product area which benefited most. That is maybe one. Maybe for Piping, it could be in terms of market expectation, a bit more challenging because new build has come down or will come down to a certain extent, meaning that building permits are not growing that strong anymore. They are more or less stable in Europe, if you look at the first nine months of last year. That brings me to the second part, the geographical perspective. If you look at building indicators, just from a building permit perspective, just the new build sector, there are some countries, where building permits have been growing last year for the first nine months, for example, France and Italy, and other countries where we have seen rather a decline or regions like the Nordics, for example, building permits were down around 9% in the first nine months, but also the Benelux. It's a bit mixed picture. Overall in Europe, building permits, just as one indicator, are more or less stable in the first nine months, of 2022. This is an indicator for the new build business 2023. Thank you so much. You're welcome. The next question comes from Christian Arnold from Stifel Schweiz. Please go ahead. Yes. Good morning, gentlemen. 2 questions from my side. First, coming back on pricing, you haven't quantified the price increase you made in January. Was it the 1% you mentioned before? Maybe that is a misunderstanding. We will or have implemented an extraordinary price increase of January only in a selected number of countries, with an impact of around 1.5% as of January this year. Okay. I'm not sure about the 1%. Yeah. Okay. The one and a half. Okay. Yeah. This 1.5%, that's included in your guidance about the top line price increase of 6%-7% for 2023? Correct. Thank you. Second question on your focus, product introduction, product innovation. I mean, you had a very strong support from your FlowFit, product launch 2 years, I think the last 2 years. Do you expect this FlowFit support also to happen in 2023, that you have again an outperformance of the Piping Systems division? We expect that FlowFit will be a significant contributor to growth also this year. If it is sufficient for an outperformance or other product areas, I don't know. We expect a significant contribution of FlowFit this year. We will further roll it out to another two countries. We roll it out to France and the UK this year. We'll have around 10, 12 countries where it's been introduced. What that means, we expect also from the markets where we have introduced the system two years ago or last year, growth now this year. It will be a significant contributor to the top line for Piping Systems. Okay. On the new products you are launching this year in 2023, which are the, let's say, the blockbuster products this year? Although probably not as big as FlowFit, but still, where do you have the greatest hope for top-line support from your new products? We will have, as usual, several introductions, innovations this year. We will talk about them a bit more in detail than with our full year results, in March. One highlight is, and I can talk about that already now, is a new toilet bowl. It's called a Acanto, a new toilet bowl. It's a ceramic WC with a further improved performance in terms of, Sorry, flushing performance or water saving, however you wanna look at it. Also, with some further developed technologies for easier installation for plumbers. This is, for us internally and hopefully also for the customers, then the highlight this year. We will give you more flavor about this product with our full year results. Okay, thank you. Last question would be, also on another focus you have for 23, the prefabrication in the DACH regions. Could you remind me, what kind of sales you generate with the prefabricated products, so far on group-wide basis? On a group- What do you expect from... Yeah. On a group level, it's a small single digit number, not that much. If you go to the specific segments, for example, within installation systems, it's obviously a higher share. More importantly, we are growing strongly with these prefabricated solutions, double digits. We have also invested into this business since one or two years, for example, into a new production hall in Germany. That's one of the two plants where we are doing this prefabrication solution or products. It's an important part, and it's one of the areas how we can, we believe, gain further market shares in the German-speaking region this year. Thank you very much. The next question comes from Cédric BML from Morgan Stanley. Please go ahead. Thanks very much. Hi, gentlemen. I have a follow-up question on the point of destocking being at an end. I appreciate that you don't have quantitative visibility on that. Assuming that it is at the end, would it be fair to say that right now you're seeing your volumes in Q1, down sort of mid-single digit range? Because ultimately, if destocking is coming to an end, that should be where or broadly where your volumes are trending. Is that a fair assumption? We will not give any guidance or comment on any quantitative volume outlooks for the first quarter. Look at the last 2 quarters, how uncertain these volume developments are, especially due to the destocking effects. We still, as we said before, we assume still that a minor part is left of excess stock. I refrain from making any quantitative outlooks for Q1 volumes. Could you comment on what the volumes have been year to date? Not from here, just what you've seen in the first three weeks of the year. Not an outlook, a backward-looking. I also want to refrain on that behalf. Now, more or less, not even 2 weeks of working weeks. That's really too short just to take 2 days and taking that as an indicator. I also refrain from making any statements of the last 10 trading days. Fine. Could you comment on, remind us how much of your business is resi versus non-resi and then the new build versus renovation exposure? That would be really helpful. Thank you. It's around two-third residential versus one third non-residential, and roughly the same number applies for renovation versus new build. Two-third renovation, roughly one-third new build. Very helpful. Thank you so much. The next question comes from Patrick Grafe from UBS. Please go ahead. Thank you. Good morning, everyone. I'd like to follow up just on the previous question around volume trends, and I realize you won't give any quantitative guidance. Just thinking about comparable basis, not just Q1, but Q2, where we did see the inventory build and pre-buying, with the price increases coming in July, would you say or would you confirm it's reasonable to assume that the basis will still be very high and especially in Bathroom Systems, we should assume lower activity levels on the volume side compared to H1 2022? Just from a logical perspective. I agree on that. Of course, we have strong comparables in the first half of this year due to the inventory build up and the strong volume growth in the first half of last year. To that extent, I agree. The comparison basis is tough. This is true. Okay. Okay, great. The second question, on piping. You talked a bit about the performance also being supported by strong FlowFit business and rollout. Was there, in your view also, an element of a heating benefit, right? I think you have a bit of heating exposure in piping. Yes, this is true. We have, it's a smaller part, but a smaller part of our Piping Systems are dedicated Piping Systems for the heating solutions in a building, basically to transport heating water. That was also doing well last year, but it's a smaller part of the Piping business. Might be that we also benefited there, a bit from the shift from sanitary to heating. The last one is, you talked in quite some detail about the challenges for 2023, energy costs, wage inflation, input costs, general. You also mentioned the focus on operational flexibility. Should we build into our bridge an element of cost savings? Are there any plans already to maybe manage a bit lower plant loadings in the first half of the year, or is that nothing we should consider in a material way? We don't have any specific structural cost saving plans in mind or implemented for 2023. Operational flexibility means that there where we can afford, we try to be flexible with cost where it doesn't harm our midterm potential. I'll give you an example where we will not be flexible. With our sales organization, assuming in a scenario volumes are challenging, we would not downsize our sales organization. Even more a no-brainer, we would not adjust our cost base in R&D. However, in the plant, in logistics, as far as possible, we try to cope with volume flexibility. As Tobias said before, one of the reasons why we stick to our EBITDA margin guidance of 27% for 2022 was driven by the fact that the plants and logistics did a great job in the Q4 to cope with this very strong volume decline of -18%. Okay, super. Thank you very much. You're welcome. The next question comes in. Yassine Touahri from On Field Investment Research. Please go ahead. Yes, good morning. I would have just a question on your raw material cost. Could you give us a bit more color on what's happening on raw material? What are the key raw material that you're using? Is it ceramic, plastic, aluminum, copper? Any color on that would be very useful to understand the evolution in the past couple of quarter on what you see for 2023. My second question would be on your gross margin. Have you seen a sequential improvement in your gross margin in the first quarter? Do you expect further improvement in your gross margin given the price increase that you implemented and the stabilization of raw material? I take number 1. Number 2 will be answered by Tobias. Our raw material exposure is about 40% is exposed to industrial metals. About 25% of our raw materials are exposed to plastics, and 35% is the rest: electronic components, packaging, ceramics, raw materials. What we have seen over the last quarter is that plastic prices came down to a certain extent. However, on the metal side, some of the metals have not coming down. For example, nickel went up quite strongly. That is an important cost driver for stainless steel or steel, which we need. We have also part of our raw materials are semi-finished goods or components even, which we need for some of our products. For example, Shower Toilets, where we are exposed also now going into this year with second round effects, meaning that wage inflation, which takes place obviously also the supplier side, has an impact on our purchasing price. On the second question, we do not yet have the final gross margin. If you take the indication we have at that stage, Christian mentioned before that raw material quarter-on-quarter have been down pricing-wise by minus 1%. Energy is not part of the gross margin, so you cannot take that into account. Prices have been clearly higher up in Q4 than Q3, based on the implementation of price increase of July and especially as well the one of September. That should, ceteris paribus, support the gross margin. Maybe just a follow-up on the, on the industrial metal. You mentioned nickel. What are the other key metal that we should look at? Is it aluminum, copper? Any color would be very useful. You have it. It's basically nickel, aluminum, copper and a little bit of zinc. These are the four main industrial metals affecting our raw material basket. Can you share the proportion which is the most important, or is it? Honestly, I don't even know myself, so I can't share because I don't know. Most of nickel is definitely a very important one, but I don't have a number in mind how important it is. Thank you very much. The next question comes from Remo Rosenau up from Helvetische Bank. Please go ahead. Yes, thank you. one element of increasing costs were also rising marketing and travel costs versus the COVID-19 years 2020 and 2021. Have they been 100% back on normal levels now in 2022, so that we shouldn't expect an additional, let's say, margin impact due to those elements in 2023? Marketing expenses most probably be more or less on the previous year's level, or in other words, will not yet be back on pre-COVID-19 level, where we had a marketing spend of around CHF 120 million. We will not yet be fully back. Travel expenses will be higher, I guess, than in the previous years. Yes. Yeah. Basically back on the pre-COVID level. You were not back on pre-COVID levels in 2022, and it will go there in 2023 more or less. No, in travel, we're back already in 2022 on pre-COVID level. Okay. It will increase further. No, we didn't make a statement on that. I think that, sorry, maybe that was not clear. Christian has first been commenting on marketing, and now the statement we're making here is on travel. Travel, basically is 2022 on pre-COVID-19 level, and we stay roughly round about there as well in 2023. Okay. What was the difference between 21 and 22, if you are able to tell us? I, we don't yet have the final figures. I don't have that in mind. I apologize. Okay. There will clearly be a lower effect here compared to 2021, 2022. Sorry, no, now you confuse me. Where do we have a lower effect compared to? Yeah, I mean, you know, these costs were up in 2022 versus 2021 because- Yes. were going back to usual levels. This jump again will be certainly lower in 2023 versus 2022 compared to 2022 to 2021. Yes. Yeah. Again, 2023 will be roughly on the same level than 2022, and therefore there's not a jump anymore from, 2023 to 2022. Okay. If you allow me a comment, Yves Bromehead, now, you know, travel expenses are, in general, at a relatively low level. We are a very cost-conscious company. Therefore, whatever travel expenses we'll do this year versus last year will not have a major impact. Yeah. Yeah. The marketing is the bigger thing. That's clear. Marketing is more important. This is true. Yeah. Okay. No, thank you. That's it from my side. The next question comes from Marta Bruska, from Berenberg. Please go ahead. Hi. Good morning. Thank you for taking my question. Can you hear me well? Yes. Perfect. I have two questions, actually, if I may, please. What is the% of your sales that you derive now from the FlowFit or the% of the sales in the Piping Systems, please? Sorry. Now I didn't understand. FlowFit percentage. FlowFit. Sorry. We don't disclose this number, but it's a substantial part of the piping business. If we will be a pharma company, we will talk about a blockbuster, but we are not disclosing the numbers. All right. To my understanding, that was below 1% sometime in 2019, right? If that was a blockbuster, then maybe it's tripled at the moment. Is that the right way to think about this? As I said, we do not disclose any quantitative numbers or comment any quantitative estimates. All right, thank you. With regards to the prefab, that's a similar question. I was wondering what sort of the share of your revenues do you currently derive from the prefabricated products? In particularly also it was regards if you were able to give us some indication on the margin. These are the products that, to my understanding, you actually have to put a little bit more labor into. With the wages going up to mid-single digits, as you mentioned, what is the impact on the growth and EBITDA margin mix coming from the shift to more prefabricated products according to your expectations? The share of prefabrication business is in a low single-digit share of group sales. As I said before, within the specific product areas, it's a higher share, but on group level, it's a low single-digit share. Margins are a little bit lower, this is correct, but still very attractive. Even though we are hopefully growing faster with this segment, that doesn't have a major impact on kind of margin dilution. The difference is not so big that it has really an material impact on margin dilution, for example. All right, thank you. If I may, just really the last one, please. What is your, just a general one really, what is your ambition for Geberit, you know, over as a company or as a group for the next 5 to 10 years? Overall, we, you could argue our rolling midterm target to achieve profitable growth. Profitable growth means that we want to grow, you know, the numbers, local currency can have a average 4%-6% with a margin level of 28%-30%. To continuously grow this business, our business franchise, mainly in the regions where we are active, there is still enough growth potential in under-penetrated markets, for example, also in Europe. In the markets which we call expansion markets in Europe, that's 30% of our business. Outside Europe, in the emerging markets where we see potential, but also in the mature markets, the Central European markets, more or less, where we are basically growing the market, not that much market share, but the market with innovative solutions or upgrading the market to new, better toilet solutions, for example, Shower Toilets. Also next five to 10 years, we wanna grow continuously in average by 4%-6%. That's basically what we did since the IPO 20 years ago. I'm sorry, maybe I wasn't clear. I didn't mean the financial target, but more like a mission for the company. Do you have something like this, like a mission statement? A mission? Yes. We wanna be the best toilet and piping manufacturer in Europe. Basically, we are strong in Europe, as you know, with a selective presence outside Europe, which we wanna grow this selective presence. We have, for example, to put it more negative, we don't have the ambition to be the global leader for this company in 5-10 years. The European leader for sanitary products with a unique position behind and in front of the wall, and selective presence in attractive markets for European sanitary technology outside Europe. Thank you. That's all from my side. Thank you very much. The next question comes from Christian Ferares from AWP. Please go ahead. Good morning, gentlemen. Maybe one more to Germany. The start of new buildings in December went down, I guess, the fifth time consequently, the building permits in November went down strong as well. Is the assumption correct that the decline in volumes, in Germany at least, will continue in the first semester 2023? Is it possible that you could balance this out with your higher prices? Thank you. I will not make any outlook for our volumes in Germany for the coming month, but I want to comment on the building permits. As I said shortly before, building permits were coming down in Germany. That's true. It even accelerated a bit towards the Q3. Overall, building permits are relatively still okay in Germany. Residential in the first 9 months were down 9%-6%. Residential, almost a previous year's level. Keep in mind, there is still a large number of approved buildings, but not yet built buildings in Germany. There's a certain caution as well, which should also help for the market. I agree with you. The latest indicators, building permits in Germany were rather negative as versus end of year. Thank you very much. The next question comes from Stefanie Schulz, she's here from Mirabaud Securities. Please go ahead. Yes, hello. Could you give us any idea or indication of the dynamics of the volume decline in Q4? Speaking about October, November, December. Did the volume decline accelerate over the quarter or how was the pattern there? The beginning was a bit better than November and December, so it was a bit worse in November than December. I would not read too much into these monthly numbers, to be honest. Maybe a second question on the German installers. What's the current backlog and how many weeks is this? Has this increased because of the shift from demand for heating solutions or decreased, or how does this look like as compared to last quarter? The latest number for the order backlog in, with German plumbers is 16.7 weeks. That's a bit lower than the number in summer, which was 17.9 weeks, but that's mainly driven by seasonality. Also, this autumn number of 16.7 weeks is a new record number. That's year-on-year, a plus of 20%. Again, coming back to my answer to the previous question, the order backlog is still very strong in Germany in general. However, the 16.7 weeks in all might be driven also very much by the fact that there's a strong demand for heat pumps for the heating effect. When you looked at organic growth in Germany, I mean, it was really down. Is this attributable 50/50 to destocking effects and the shift to heating solutions? Or how? I mean, you cannot quantify it exactly, but just to give a rough idea. I think because of these substantial stocking effects, especially also in Germany last year, in the first and in the second half of the year, maybe it's helpful to look at the longer period. If you look at the last two years of Geberit now in Germany, we have been growing by 12%, or around 6% annually. This is a strong growth. As you know, we have strong market shares in Germany. Sorry. It's very hard to say due to the stocking effects, what exactly happened now over the last couple of months on the demand side. Maybe we have a better, clearer picture now going into 2023 about the real demand for our products once these excess stocks are really washed out of the channel. I mean, maybe on another one on piping. Is it fair to assume that growth in piping was really mainly driven by FlowFit? How did the other products do? Did they also contribute to growth in the Q4 or also for the full year? There were basically three reasons for piping stronger growth. Number 1 is we did stronger price increases for pricing. This 9% average price increase last year was across all three product areas. For piping, we did double-digit price increase. That was one. The second one, the project business was going well. New build was very good. Maybe even some catch-up effect from the non-resi side after COVID-19 last year. Also a driver, which has a bigger impact on piping business because new piping is more exposed to new build than the other two product areas. The third element then was flow through. Okay, maybe a last one for Tobias. Can you give us some indication on net working capital and development in H2? No, at that stage, not yet. The negative starting point which we had in accounts receivables obviously stayed. You know, the year-on-year effect will be impacted by that accounts receivable technical effect. The second indication I can give at that stage as well is obviously CapEx. As mentioned by Christian, we are at around CHF 160 million and therefore, a bit lower than on the hinted at the Q3 conference. Okay. Thanks a lot. You're welcome. The next question comes from John Revill from Thomson Reuters. Please go ahead. Yeah. Thank you for taking my questions. Just a couple of clarifications, if I may. Mr. Buhl, when you mentioned about the, you expecting a challenging environment for the construction industry, where do you mean that to be? Is that, is that Europe or is that globally? That's the first one. That was mainly meant for Europe. Outside Europe. Right. We have a couple of markets where we are rather positive. Right. Excellent. Okay. On the wage increases that you mentioned as well, was that a Geberit specific? The 5-6% wage increases, was that Geberit or was that in the construction industry? Was that? No, I wouldn't refer that to the construction industry. That's just the manufacturing industry maybe which is driving that, and more importantly, the geographical spread of your operations obviously. Right. wage inflation we have, if you look at the Geberit footprint, it is Poland. On the other end of the side is Switzerland, where we have a disproportional high share of personnel costs. In average, it's 5%-6%. That was a Geberit figure. Fantastic. Okay. The other thing was, I'm quite interested in this home improvement trend, which you kind of benefited from but then the thing's come to an end now. I just wondered, how big as a share was the home improvement of your sales at its peak during the COVID period, and how much has it gone down to? I just wondered it was a kind of... Also, is there a kind of a norm? What was it previously? What was a kind of a normal home improvement kind of level? that's difficult to answer, but maybe one way to approach the question is to look how fast we have been growing throughout the COVID-19 period when that tailwind supported our business. We were growing two to three times faster than in normal times. Right. Partly driven by this tailwind, but also I think also driven a bit by our decisions how we managed the crisis, so also disproportionate market share gains. Right. We don't have a sharp number. Right. Okay. But it was. That was like a big... You grew two to three times faster than normal, and that a large part of that was this home improvement trend, and that's now kind of gone then, you think, then. That's being pulled forward now because of people have already done the home improvements. Yeah. Well, we believe that, and we always communicated also that this tailwind from COVID-19, that people renovating their house will be over at a certain point in time. That's what we have seen in the course of last year. As expected, you could say that this is over at a certain point. Thank you. Thank you very much. The next question comes from Imraan Bux from Baader Helvea. Please go ahead. Yes. Hello, good morning. Thank you for taking the question. Actually just have one question left. Based on your experience now over the past years and also not considering extraordinary price increases, do you think that wholesalers restock Geberit products in any case, as soon as inventory reaches a certain lower level, just to make sure having enough, given that they probably don't care about shelf life? First we have to come to the situation where they are at normal level before we maybe talk about restock. Now with the experience over the last two, three years with these extraordinary or last two years, extraordinary price increases, the learning is that obviously these price increases, especially to the extent what we have seen over the last two years, have a significant economical impact on wholesalers. In the future, whenever we will be in a similar environment again, I would expect massive stocking effects. maybe then not taking into account the last 2 years, like maybe, the 5 years, you know, the 2015 to 2019, like, how was it back then? Like, as soon as normal level is reached, they restock right away? Yeah. We will always have stocking effects also in the future. We have always had stocking effects in the past. When we increased prices as of April, typically 1% to 1.5%, we have seen stocking effect. The extraordinary element last year was that the stocking effects were enormously strong due to the extraordinary strong price increase. Once we are back to a normal inflation environment, I would expect that the stocking effects will not be gone, but they will come down also again to a normal historical seen activity level in terms of build-up stocks and de-stock operations. All right. Thank you very much. The next question comes from Christoph Dolleschal from HSBC. Please go ahead. Thank you very much. good morning. 2 follow-up questions, if I may. The first one is on the shift from sanitary to heating. When do you think that is going to reverse again? The second one, rather high level, top-down view on the building activity, because as you said, 9 months stable, but the last 2 or 3 months, at least in terms of early indicators, saw a significant decline and coming off in some markets. Can you share your overall expectations for new build and renovation activity in your key markets? The first question is difficult to answer because, there is, as I said in my introduction, also a limiting factor to shift because as you might know, most or all, I think, heat pump suppliers have issues to cope with the strong demand. It also depends on the supply side, I think from these heat pump suppliers. It also depends, I think, on a more higher level, what happens in general with the energy crisis in Europe going into the next winter, how dependent Europe, maybe also Germany, will remain to be from the Russian gas. That's also driver. There are many unknowns, therefore, it's quite hard to have a view when that should be over. The only thing I know at a certain point, whenever it is, you need to renovate again your bathroom. That is quite clear. The second part of your question is difficult. I think the environment has become more challenging, as we said in the introduction, interest rate going up. However, most market participants expect a stabilization in a declining interest rate environment. Again, that might help then again, but it's difficult to predict what happens with the building permits going forward. To simply say, just very roughly, say, a slightly decline in new build and, a flat renovation activity in your key markets. If building permits, the latest indicators are going down, that will then trigger with a certain delay, obviously, a decline in new build environment. As I said, for the first nine months last year, and this is, let's say, the majority driving of the business this year. On a European level, it is rather still a stable picture. okay. and renovation activity. Renovation is always much less cyclical than new build. That's typically the stabilizing factor. There, that is typically not that much volatile. You could argue the negative side, coming back to the COVID-19 topic and home improvement then, that was obviously only driving or mainly driving the renovation sector. There is maybe a little bit a challenge from this pull-forward effect on the renovation sector from this COVID-19 home improvement trend. Okay, thanks very much. The next question comes from Manish Beria from Société Générale. Please go ahead. I have just this one question. What is the time lag like this new, slow new build activity will have an impact on Geberit? I think like there is some time lag when the actual bathroom is done, no, after the new, the new building has been done. What is the time lag like? It's like 18 months or something like that. Is this a fair assumption? The time lag is depends a bit on the product area between 9 to 15, 18 months from the proof building permit to our business. You mean to say now, like you are seeing the decline in the building permits now, so that will only impact Geberit, I mean, that part, I mean, will only impact in 2024 because there is so much time lag there? Yeah. You know, there are also stocking effects in between, coming back to the wholesaler stocking I talked about before. That's the reason why I said the first nine months of last year is maybe at the moment the best indicator for the new build activities this year really affecting Geberit. Okay, thank you. We have a follow-up question from Arnaud Lehmann from Credit Suisse. Please go ahead. Oh, hello again. Yes, thanks so much for taking the follow-up. Can I just go back to Piping Systems please again and could you give us a split on drainage versus supply for that business? The majority, a little bit more than 50% is supply and a little bit of smaller part is drainage, but it's well-balanced. Bit more supply, bit less drainage. Great. Thank you. Where was FlowFit rolled out already, by end of 2022, and where are you planning to roll it out in 2023, please? Two additional countries, to France and UK this year. That would complete the full Europe rollout? Yeah, most probably. We are not yet absolutely clear, but we are reaching more or less now all the countries where we are rolling out. We'll be definitely not rolling out outside Europe. My piece that there we will add one or two other countries, but that's not yet decided. Great. Does it come with a kind of initial bump effect as the plumbers buy the tools for it, or is that just not really meaningful in the scale of volume business? No. The tools are given for free to the plumbers. They don't pay for them. Okay. That's good to know. Thank you. Just very final one on marketing to triple check. Marketing is flat for 2023 on 2022. Is that the message? We don't have yet the number, but that is our latest forecast, yes. Excellent. Thank you very much for your time. You're welcome. Ladies and gentlemen, that was the last question. I will now turn the conference back over to Mr. Buhl for any closing remarks. Thank you for your participation and your questions. We wish you all a great day. Goodbye.