Geberit will raise its prices to compensate for the increase in the cost of energy and plastics linked to the Iranian conflict

The manufacturer of ceramic plumbing and sanitary equipment Geberit announced on Tuesday a 2% increase in the price of its plastic pipes and certain other products from June. The move aims to offset increased costs of plastics and energy resulting from the conflict with Iran.

The Swiss group, considered a barometer of the construction sector, has already raised its prices by 5% this year on copper-related products – which represent a relatively small part of its turnover – in addition to its usual annual increase of around 1%.

‘We are impacted by the substantial increase in the cost of plastics and energy,’ CEO Christian Buhl told journalists, specifying that this latest measure was motivated by inflation in raw materials now extending from basic plastics to engineering plastics.

Plastic prices rose in the wake of soaring oil prices, while the conflict in the Middle East effectively led to the closure of the Strait of Hormuz, a strategic global trade route. Geberit, however, specified that the conflict had little direct effect on its activities, with shipments passing through the Strait of Hormuz representing less than 1% of the group’s sales.

‘The rest of the Gulf region is operating relatively normally,’ added Christian Buhl, stressing that sales in Saudi Arabia have increased since the start of the year, including in March.

These statements follow the publication of first quarter results, where Geberit reported a slight decline of 0.7% in turnover to 873 million Swiss francs ($1.11 billion), in line with expectations. EBITDA increased by 2.3% to reach 283 million francs, exceeding the 279 million forecast by the Visible Alpha consensus.

Geberit said heightened geopolitical risks made it difficult to assess the overall economic environment, particularly with regard to inflation, consumer sentiment and interest rates, all of which determine construction demand.

However, Christian Buhl clarified that the company’s market view had barely changed since March, with European demand showing resilient so far and Germany expected to be stable or slightly growing.

‘We have not yet seen a direct impact of the war in Iran on demand in the construction sector in Europe,’ concluded the manager.

($1 = 0.7847 Swiss francs)