Geberit : Summary Report 2023

2023 NET SALES BY MARKETS/REGIONS

1. Germany (29%)
2. Switzerland (11%)
3. Western Europe (10%)
4. Northern Europe (9%)
5. Benelux (8%)
6. Italy (8%)
7. Eastern Europe (8%)
8. Austria (6%)
9. Middle East / Africa (4%)
10. Far East / Pacific (4%)
11. America (3%)

An extremely difficult year is behind the Geberit Group. Volumes were significantly lower due to the declining building construction industry

in Europe and the high volume level in the prior year. Furthermore, the sanitary industry in some countries was negatively impacted by the shift in demand from sanitary to heating solutions. However, the global and regional supply chains eased somewhat in the reporting year. There was good availability of raw materials and com- ponents, and the delivery times were much shorter than in the previous year. Despite the very difficult market environment, operating margins were significantly higher compared to the previous year. This was primarily due to the high level of operational flexibility, especially in the plants and logistics, the significant fall in energy prices, and consistent price manage- ment. As a result, it was also possible to absorb most of the impacts of the Swiss franc, which was significantly stronger compared to most currencies. All in all, this is reference to the structural and financial strength as well as the resilience of the business model. This enabled the company to further consolidate its position as leading supplier of sanitary products and gain market shares.

DECLINE IN SALES DUE TO VERY HIGH LEVELS IN PREVIOUS YEAR AND DECLINING BUILDING CONSTRUCTION INDUSTRY

In 2023, the Geberit Group's net sales fell by 9.1% to CHF 3,084 million. This decrease was strongly influenced by negative currency effects of CHF 147 million as a result of the Swiss franc, which was significantly stronger compared to most other currencies. In local curren- cies, this resulted in a decline of 4.8%. Price increases of around 8% had a positive impact on the development. Volumes were significantly lower due to the declining building construction industry in Europe and the high prior-year level. Furthermore, the sanitary industry in some countries was negatively impacted by the shift in demand from sanitary to heating solutions.

In 2023, the European markets suffered the most from the extraordinarily difficult underlying conditions for the building construction in- dustry. Currency-adjusted net sales in Europe decreased by 6.0% overall. Also in decline was the Far East/Pacific region (-3.8%). In contrast, growth was achieved in the regions Middle East/Africa (+17.1%) and America (+1.5%). In the product areas, currency-adjusted net sales decreased by 2.2% in Piping Systems, by 5.7% in Bathroom Systems and by 6.2% in Installation and Flushing Systems.

OPERATIONAL FLEXIBILITY AND COST DISCIPLINE LEAD TO SIGNIFICANT INCREASES IN OPERATING MARGINS Despite the very difficult market environment with significantly lower volumes and considerable wage inflation, profitability could be in- creased. Operating margins rose significantly, while operating profit and operating cashflow increased slightly. This strong performance was made possible primarily by the high level of operational flexibility, especially in the plants and logistics, the fall in raw material and energy prices, and consistent price management.

In Swiss francs, all results were heavily impacted by the negative currency development. In total, operating cashflow (EBITDA) increased by 1.4% to CHF 921 million. After currency ad- justments, this corresponded to an increase of 7.8%. The EBITDA margin increased significantly by 310 basis points to 29.9% compared to the same period in the previous year. Operating profit (EBIT) increased by 1.8% to CHF 769 million (currency-adjusted +8.8%), corresponding to an EBIT margin of 24.9% (previous year 22.3%). Mainly due to a positive one-off tax effect in the previous year and a more negative financial result compared with the previous year, net income declined by 12.6% to CHF

617 million (currency-adjusted-6.3%), corre- sponding to a return on net sales of 20.0% (pre- vious year 20.8%). Earnings per share fell by 10.2% to CHF 18.39 (previous year CHF 20.48).

However, due to the positive effects of the share buyback programme, the decrease was less than proportional compared to the devel- opment of net income. Currency-adjusted, this resulted in a decrease of 3.7%.

INCREASE IN FREE CASHFLOW

Despite the difficult market environment, free cashflow increased by 11.3% to CHF 625 mil- lion. This was due to higher operating cashflow and a positive year-on-year development in net working capital. In contrast, the significantly higher investment volume had a negative im- pact. The free cashflow margin reached 20.3% (previous year 16.6%). CHF 662 million, or 106% of the free cashflow, was distributed to shareholders during the reporting year as part of the dividend payment and the share buyback pro- gramme.

ENVIRONMENTAL PERFORMANCE SIGNIFICANTLY IMPROVED AGAIN - SUBSTANTIAL REDUCTION IN CO2 EMISSIONS

The absolute environmental impact of the Geberit Group decreased again in 2023 by 17.6%. Currency-adjusted net sales fell by 4.8% in the same period. As a result, the environmental impact in relation to currency-adjusted net sales (eco-efficiency) decreased by 13.4%. Since the integration of the energy-intensive ceramics production in 2015, eco-efficiency has improved by 62.6%. As regards the long- term target, which is based on an average improvement of 5% per year, Geberit therefore remains very well on course.

Geberit also significantly exceeded its medium -term goal of reducing relative CO2 emissions by 5% per year in the reporting year. In relation to currency-adjusted net sales, CO2 emissions decreased by 15.6%. Compared to the previous year, absolute CO2 emissions fell by 19.6% to 121,014 tonnes (2022: 150,591 tonnes) and have therefore been reduced significantly more than volumes. This reduction is due to targeted operating measures and the continuous increase in the share of electricity from renewable energy sources, plus a decline in production volumes. Since 2015, CO2 emissions in relation to currency-adjusted net sales (CO2 intensity) have been reduced by 63.2%.

CONTINUED STRONG FINANCIAL FOUNDATION

The positive developments in free cashflow and the continuing healthy levels of debt allowed the attractive dividend policy and the share buyback programme to be continued while also maintaining the strong financial foundation of the Group.

Total assets increased from CHF 3,429 million to CHF 3,556 million. Liquid funds increased from CHF 206 million to CHF 357 million. In ad- dition, the Group had access to an undrawn, firmly committed operating credit line for the operating business of CHF 500 million. Debt increased from CHF 1,030 million in the previous year to CHF 1,321 million. Overall, this resulted in an increase in net debt of CHF 141 million to CHF 965 million at the end of 2023. Net working capital decreased by CHF 41 million year-on- year to CHF 196 million. Property, plant and

equipment increased from CHF 948 million to CHF 976 million, while goodwill and intangible assets fell from CHF 1,410 million to CHF 1,340 million. The ratio of net debt to equity (gearing) increased from 55.0% in the previous year to 73.1%. The equity ratio decreased to 37.1% (previous year 43.7%). The ratio of net debt to EBITDA increased slightly to 1.0x (previous year 0.9x). Based on average equity, the return on equity (ROE) came to 44.6% (previous year 42.7%). Average invested operating capital, comprising net working capital, property, plant and equipment, goodwill and intangible assets, amounted to CHF 2,724 million at the end of 2023 (previous year CHF 2,715 million). The return on invested capital (ROIC) decreased to 23.6% (previous year 26.5%), mainly due to the positive one-off tax effect in the previous year.

SIGNIFICANTLY HIGHER INVESTMENTS In 2023, investments in property, plant and equipment and intangible assets amounted to CHF 197 million - CHF 42 million or 27.1% more than in the previous year. As a percentage of net sales, the investment ratio was 6.4% (previ- ous year 4.6%). The significantly higher investments compared to the previous year were attributable to strategic plant expansions in Pfullendorf (DE) and Lichtenstein (DE) as well as the construction of a new customer centre in Germany. As part of the strategic stability, all important, larger investment projects were carried out as planned.

NUMBER OF EMPLOYEES DECREASED At the end of 2023, the Geberit Group employed 10,947 staff (FTEs) worldwide, equivalent to a decrease of 567 employees or 4.9% compared to the previous year. The decrease was primarily due to capacity adjustments of temporary and fixed-termemployees in the areas of production and logistics in connection with the significant volume decline and natural fluctuation. There was also a decline due to the adjustment of the activities in Russia. In con- trast, additional employees were required in several markets outside Europe due to focused sales initiatives.

INNOVATION AS THE FOUNDATION FOR FUTURE GROWTH

Geberit's innovative strength, which is above average for the sector, is founded on its own, wide-ranging research and development activi- ties. In the reporting year, a total of CHF 70 million (previous year CHF 72 million) - or 2.3% of net sales - was invested in the development and improvement of products, processes and technologies. Additionally, as part of the investments in property, plant and equipment and intangible assets, considerable sums were invested in tools and equipment for the production of newly developed products. In the reporting year, 25 patents were applied for, in the last five years a total of 159 patents.

EFFICIENT PRODUCTION NETWORK - SITUATION IN LOGISTICS STABILISED Despite the very challenging situation in the reporting year with a decline in volumes of 13%, productivity in the production sites remained at a very high level with a decline of 3%. This was achieved primarily through a high degree of operational flexibility, in particular by adjusting the capacity of temporary and fixed-termemploy- ees, and through natural fluctuation.

The situation in logistics largely stabilised in the reporting year. Group logistics at Geberit was already able to reach the desired availability targets for the entire product range at the start of the year, and also maintained this at all times throughout the year as a whole. Customers were supplied with the entire product range at the usual high level.

CONTINUED ATTRACTIVE

DISTRIBUTION POLICY

As in previous years, the attractive distribution policy will be maintained. A dividend increase of 0.8% to CHF 12.70 will therefore be proposed to the General Meeting. The payout ratio of 70.1% of net income is just above the 50% to 70% corridor defined by the Board of Directors.

In 2023, CHF 662 million, or 106% of the free cashflow, was distributed to shareholders as part of the dividend payment and the share buyback programme, which equates to 3.5% of Geberit's market capitalisation as of 31 Decem- ber 2023. Over the last five years, around CHF

3.2 billion has been paid back to shareholders in the form of distributions or share buybacks, which corresponds to 96.6% of the free cash- flow in this period.

OUTLOOK 2024

Due to the challenging macroeconomic conditions and the ongoing geopolitical risks, the building construction industry is expected to decline overall in the current year.

In the past two years, increased construction costs and interest rates have significantly dampened demand in the European building construction industry - especially in the new building sector. Driven by the weak development in residential construction, the number of building permits in Europe decreased by around 20% in the first nine months of 2023, leading to a corresponding decline in new building activities in 2024. The most pronounced decline is expected in Northern Europe and Germany. Conversely, new building activities in Switzer- land are expected to develop more positively due to the lower inflation and lower interest rates. In contrast, a more robust development is expected in the global renovations business, which accounts for around 60% of Geberit sales. This is primarily due to the following rea- sons:

• a fundamental need for renovations in sev- eral European countries, and
• no additional pressure caused by the shift in demand from sanitary to heating solutions, as seen in the previous year.

Despite the negative overall forecasts for the European building construction industry in 2024, the expected reduction in interest rates during the course of the year and the structural trend towards higher sanitary standards should positively stimulate demand. In the markets outside Europe in which Geberit is active, a mixed picture is expected for this year, with

strong demand in India, the Gulf Region and Egypt, for example, and with a decline in China and Australia.

Regardless of the challenging market environ- ment, the objective for 2024 remains to gain further market shares. This should be achieved by the two guiding principles of 1) strategic stability and 2) operational flexibility. The objective is to overcome the challenges caused by the uncertain volume development without harming the medium-term potential. As part of strategic stability and despite the declining market envi- ronment, various strategic growth initiatives and investment projects - for example, in selected growth markets outside Europe - will be continued or newly launched as planned in 2024. In line with the Geberit strategy, these measures shall be accompanied by efforts to continuously optimise business processes in order to be able to achieve continued high margins and a strong free cashflow also in 2024. Based on the strong foundation already built up over the past decades, the sustainability performance should continue to improve.

Both the Board of Directors and the Group Executive Board are convinced that the Geberit Group is very well equipped and positioned to meet current and upcoming opportunities and challenges. This assessment is based on the stable and long-term strategy, the proven business model with strong customer relationships and the industry-leading financial stability. Experienced and highly motivated employees, a number of promising growth initiatives, the products that have been launched in recent years and the promising development pipeline, a lean and customer-oriented organisation, an