Geberit keeps dividend as new coronavirus nails construction sector

Swiss plumbing supplies maker Geberit warned about the impact of the new coronavirus on the construction industry on Monday as building site and showroom shutdowns hit demand in March.

The maker of piping, flushing and bathroom products said the closure of building sites in Italy, Britain, France, Spain and Austria had contributed to orders falling by a low-double-digit percentage rate during the month.

Geberit, whose results are watched as an indicator for the broader construction sector, said there had also been a slowdown in other countries due to showroom closures and other restrictions imposed to tackle the outbreak.

“The coronavirus pandemic has led to an unprecedented global economic crisis and changed business realities over the last three weeks at a speed never seen before,” Chief Executive Christian Buhl told an investor call.

“Since mid-March, the COVID-19 crisis has had a negative impact on our demand. New build or renovation, it doesn’t make a difference. If construction is slowed down you cannot do renovation,” Buhl said.

Due to the volatile situation, Geberit said it was impossible to give an outlook for the building construction industry, while the situation made it bring forward the publication of first-quarter sales.

Also in the construction sector, LafargeHolcim last month ditched its profit forecast for 2020 and announced spending cuts to counter the downturn. Geberit’s first-quarter sales dropped 3.9% to 798 million Swiss francs ($817 million).

Geberit has closed three factories in France, Italy and India due to the virus outbreak, but has reopened two plants in China where it makes shower toilets. Geberit had also moved workers in France and Britain to short time work, and introduced a hiring freeze.

But it had no plans for restructuring or layoffs, Buhl said. Globally the company employs 12,000 people. The company, which has 300 million francs in cash and an unused revolving credit facility of 500 million francs, would also tap the bond markets by issuing a 150 million Swiss franc bond to strengthen its liquidity.