By John Revill
ZURICH (Reuters) – Geberit recorded its highest ever free cash flow and proposed hiking its dividend on Wednesday, although the Swiss building materials supplier said uncertainties remained about how the COVID-19 crisis would affect construction in 2021.
The maker of shower toilets, piping and bathroom ceramics said free cash flow increased 11.4% to 717 million Swiss francs ($772 million) as it cut back on marketing and travel spending during the crisis.
As a result Geberit proposed increasing its dividend to 11.40 francs from the 11.30 franc payout for 2019.
Still, the company declined to give an outlook, sounding a note of caution about the year ahead.
“As a result of the ongoing uncertainties in relation to the COVID-19 pandemic and the lack of visibility, it remains very difficult – if not impossible – to provide an outlook,” it said.
Its shares fell 1.6% in early trading.
Geberit, whose products are often used in new build and renovation projects, is seen as an indicator for the broader construction market.
The company recovered from a tough start to 2020 which was hit by a closure of building sites and showrooms due to coronavirus restrictions.
Germany, Austria, Switzerland and eastern Europe all reported higher sales last year, while countries worst hit by building site shutdowns like Italy, France and Britain saw sales decline.
Geberit responded to the crisis by increasing its digital contact with customers and had not furloughed its workers.
It increased annual operating profit by 2% to 772 million francs, while net profit fell 0.7% to 642 million francs.
Geberit had already reported a 3.1% drop in annual sales,
“Geberit remains a quality stock in the European construction sector thanks to high profit and cash flow margins, which is rightly reflected in a premium valuation,” said Martin Huesler, an analyst at Zuercher Kantonalbank.
(Reporting by John Revill; Editing by John Miller and Edmund Blair)