Geberit AG
SIX:GEBN
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
478.2
568.8
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CHF.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Geberit AG
You don't have any saved screeners yet
Good morning. I am the AT&T operator for this conference. Welcome to the Geberit conference call on the first quarter results 2021. [Operator Instructions] And the conference is being recorded. [Operator Instructions] This call must not be recorded for publication or broadcast.At this time, I would like to turn the conference over to Mr. Christian Buhl, CEO; accompanied by Mr. Roland Iff, CFO; and Mr. Roman Sidler, Head of Corporate Communications and Investor Relations. Please go ahead.
Thank you for the introduction. Good morning, ladies and gentlemen, and welcome to our conference call on our Q1 results. Geberit had an exceptional first quarter with an extraordinary strong sales growth and a record profitability level. Net sales grew by 13% in local currencies, the strongest quarterly growth rate since more than 10 years. Profitability reached new record levels with an EBITDA margin of 34.6%, which is 200 basis points above last year's already excellent result. As a consequence of the strong top line and further improved profitability, net income increased by 27% and EPS by 28% in the first quarter.Let me now comment on our net sales development a bit more in detail. Net sales in Swiss francs increased by 14.0% to CHF 910 million. In local currencies, group net sales increased by 13.0%. Main driver for the exceptional strong growth across all regions were: first, a strong home improvement trend induced by the COVID-19 lockdowns; second, inventory buildup in the distribution channel due to increasing price levels and increasing challenges with regards to product availability also in the building construction sector; and thirdly, a first base effect from the COVID-19 hitting our business in China in Q1 last year and the remaining markets as of mid-March last year.Compared to the first quarter of 2019, 2 years ago, net sales in Q1 grew by 14.3% in local currency. This 2-year comparison with precrisis level of 2019 demonstrates the strong market share gains we achieved during the COVID-19 crisis. Let me now briefly comment on regional development of the first quarter this year.In Europe, net sales increased by 12% in local currencies, with growth in all subregions' respective countries. In Middle East Africa, net sales increased by 44%, with growth in all major countries. Net sales in Asia Pacific grew by 41%, driven by a base effect in China, but also strong fundamental growth in the region.In America, net sales were up by 7%, driven by the strong demand for electronic faucets. Let me now comment on the sales development per product area. The strongest growth was recorded in Bathroom Systems with a net sales growth of 17% in local currencies, since Bathroom Systems is benefiting most from the home improvement trend and the base effect from a supply chain issue for the shower toilet mirror in the previous year.Installation & Flushing Systems net sales grew by 13%. Piping Systems grew with 9% under-proportionately, due to an ongoing weaker new build and project business.I will now comment on the operating and financial results. EBITDA increased disproportionately by 21% to CHF 315 million due to a strong margin expansion of 200 basis points versus Q1 2020. Main drivers for this margin expansion were the operating leverage from the strong volume growth, increased sales prices, a still limited impact from the strongly increasing raw material prices since the beginning of the year due to the still relatively high comparison level in the previous year quarter, and lastly, COVID-19-related cost savings, mainly due to less travel costs. The strong operating leverage demonstrates the high flexibility of our operations, and our capabilities to maintain a very high efficiency level, also in an environment of extraordinary growth. The currency development had a minor negative impact on the EBITDA margin of 30 basis points, mainly driven by the strong devaluation of the Russian ruble and the Turkish lira. EBIT increased in swiss francs by 24% to CHF 276 million, and the EBIT margin reached 30.4%, 240 basis points above Q1 2020.Net income increased by 27%, disproportionately to CHF 233 million, thanks to a better financial result. Earnings per share increased also disproportionately by 28% to CHF 6.53 due to the positive impact of the share buyback program.Let me now comment briefly on the current business environment. Construction sites are in most countries open, up and running. Showrooms, however, are restricted in their operations in most countries due to local shutdown measures. Recently, most affected were our operations in India, where the national lockdown led to a temporary closure of our local plant for 1 week. However, this will not have any impact on group sales since the plant is very small and only manufacturing for the local market.Let me now comment on our outlook for the coming months. Due to these ongoing uncertainties around the COVID-19 pandemic but also due to the general very low visibility of our business, we refrain from giving a market outlook at this point in time. For example, it is very difficult to predict when and how the current strong home improvement trend will come to an end, once the lockdown measures are lifted and end consumers start to spend their savings for other consumption opportunities again.For raw materials, however, we expect a further strong price increase of 4% to 5% in Q2 sequentially versus Q1, driven by increasing metal and plastic prices. Driven by the strong raw material price increases, we decided to implement an extraordinary price increase as of H2. We will increase the prices for the 2 product areas mostly affected by the recent raw material search, which are Installation & Flushing Systems and Piping Systems.In average, we will increase prices by around 3.5% across these 2 product areas, which cover around 60% of our sales and business. Please note that we do not intend to compensate the entire raw material price increase with this extraordinary price increase, since we benefited last year as of Q2 from substantially decreasing raw material prices.In other words, we will absorb some of the raw material price increases in favor of our customer relations, and will accept a certain negative margin impact. Let me close my introduction with a short summary. Geberit achieved exceptional and record results in the first quarter after having delivered already strong results in H2 2020. These results confirm our ability to deliver extraordinary results in times of crisis to gain market share and to maintain our market-leading productivity and profitability also in times of high volatility and high uncertainty.These results confirm us also in our crisis management and our key decisions taken 1 year ago, and give us confidence to continue to emerge stronger from this unprecedented crisis and environment. Thank you for your attention. We are now ready to answer your questions.
And the first question received is from Yves Bromehead of Exane BNP Paribas.
My first one is on demand. Clearly, here, we can see that you're running well ahead of 2019 level. And I appreciate that the home improvement trend is very difficult to predict. But I guess my question is more on the Pipe segment, where -- when I listen to the tone that you use, it still seems like it causes concern as you come out of the first year of COVID. But the data still suggests that you're growing quite nicely here. So can you maybe give us more granularity as to what you're seeing in this product category and how we should think about this going forward, given this probably has a bit more visibility on the outlook? That would be my first question. I don't know what's the limit in terms of questions [ prefer ], but I'll ask the second one, if I can. Just on the incremental OpEx, I think you had expected some increased marketing and digital expenses. Did this already occur in Q1? Or are they going to be more Q2, Q4 weighted?
Piping business is growing a bit weaker than the other 2 product areas, which we believe is driven by a weaker new build business and also a weaker project business driven by the COVID-19 crisis that has started to emerge already in the second half of last year and continues in the first quarter this year with a disproportionate or somewhat lower growth of Piping Systems. With regards to marketing expenses in the first quarter, they were slightly below the first quarter of last year, but that was very much driven by extraordinary costs, which we had last year for our brand harmonization exercise. Excluding this onetime effect, we have been able to spend a normal marketing budget as planned on precrisis level. For example, we spent for a dedicated campaign to support the home improvement trend, an extraordinary marketing budget, so we have been able to spend a normal precrisis marketing level in the first quarter.
Next question received is from Yassine Touahri of On Field Investment Research.
A couple of questions on pricing. Could you give us the price increase that you registered in the first quarter of 2021, out of your 13% like-for-like growth? And based on the sequential price increase that you have announced, I assume from April, what kind of price increase are you budgeting for the second quarter of 2021 and for the full year? That would be my first question. And my second question is on the margin pressure. Would you expect some gross margin pressure as soon as Q2 2021? Or is it going to be a little bit later?
First question regarding pricing, there are 2 price increases this year. The first one is the regular one as planned, which we implemented as of April 1, to around 1.5% as usual. And the second one, what I mentioned before, will be effective as of H2 is an extraordinary price increase of around 3.5%, covering around 60% of our business. That leads me to your second question, these price increases will not cover the currently seen and expected raw material price increase. We have also provided a chart in our presentation on Slide #7, showing what we expect in terms of raw material price pressure in the first and the second quarter, and this will not fully compensate. Therefore, we expect a negative impact from pricing in the second quarter in terms of sales prices versus raw material prices.
And on the first quarter, is it fair to assume that the price increase was like 1%, 2% in the first quarter of 2021?
The first quarter was around 1% to 1.5%.
The next question is from Arnaud Lehmann of Bank of America.
Firstly, just a follow-up on the cost inflation side to make sure I understand properly. The 1.5% regular price increase in April, that is covering the cost inflation that we have seen in the last few months. But then more recently, you have seen an incremental negative trend on the cost side, and that's why you're annexing this H2 price increase for 60% of the business. So it's incremental cost inflation that was more recent? That's my first question.And my second question, just coming back on your strong sales in the Bathroom Systems. But at the same time, you mentioned that there are still some restrictions in terms of the showrooms. So how do we understand the fact that some of the showrooms are still closed and still you managed to get very good sales in Bathroom Systems?
So first, in the first quarter, we still had a positive effect from base price increases versus raw material price effects. And price increase, which we implemented beginning of April, the regular one was independent of the raw material price development. Since the raw material prices started or remained to increase heavily now starting into the second quarter, we decided to implement this extraordinary price increase.And I repeat, again, not a mathematical exercise, where we exactly want to compensate with price increases the current raw material price inflation. It's just to compensate part of the strongly increasing raw material price environment.And the second question regarding Bathroom Systems. We do not believe that the current restrictions of showrooms will have a material impact on our bathrooms business, because the showrooms were mostly affected also last year in spring and then as of autumn. And obviously, we have been able to generate strong growth. So we believe that this effect of restrictions in the showrooms has a rather limited effect on our business. That's, for example, one of the surprises: 1 year ago, we believed that, that will have a major impact. It didn't seem to be very much the case.
The next question is from Martin Flueckiger of Kepler Cheuvreux.
I've got 2 and then I'll go back in line. First one is on the raw material price impact that you're expecting. Now I realize how difficult it is to project raw material prices, but I was just wondering since we're already almost half into Q2. Could you provide us with a rough estimate or guesstimate, if you like, on the expected net pricing impact on EBITDA -- on the EBITDA margin in Q2? That would be my first question.And the second one is regarding the development of the home improvement trend. I guess most people, including myself, were kind of surprised by the strength of this trend. Just wondering, what are you seeing in terms -- I guess you're doing consumer surveys or you're reading a lot of consumer surveys. What are you reading in terms of this concluding trend and associated with it the home improvement and renovation trend that you're seeing? How dependent is that really on the fact that people are not going on holiday currently and might return to going on vacation in the second half and definitely into next year? What are you seeing there? Basically, what I'm trying to get at is, is home improvement going to remain with us beyond the lockdowns that we're currently seeing?
The first question I can't answer correctly. I can repeat that raw material prices, we expect to increase by 4% to 5% in Q2 versus Q1. I mentioned our base price increases before. So you just have to do the math and then you see the impact on the EBITDA margin.Second question about the home improvement trend. We do not do consumer surveys. That's not our style, to be honest. But what we see is a strong, obviously, demand for bathroom-related products. For example, shower toilets, which we believe is very much driven by a strong demand from end consumers spending their money in their house, and we hear that for many customers that, that seems to be the case.What will happen in the future? I don't know. I'm not an economist. I'm selling toilets. I don't know exactly what the end consumers will do once they have their savings ready to spend for other opportunities. My best guess would be, once you're able to travel again, for example, you will spend your money for travel again. And that is our best guess at the moment that, that will lead again to a stop or, let's say, a reduction or stop of this home improvement trend. Maybe it has even impact that we will see that there was a kind of a pull forward of certain elements, and that could have a negative impact, but that's all crystal ball. We do not know. What we have done recently, and I mentioned it before, since the beginning of the year, we tried to benefit as good as possible from this home improvement trend.We spent -- we are running a dedicated marketing initiative, very much digital initiative, where we are focusing on end consumers to improve, upgrade their bathrooms. That's what I mentioned before, that was partly also our marketing budget and what we spent for the first quarter. Once the lockdown is over, what people and consumers will do, actually, we are not the experts.
The next question is from Martin Hüsler of Zürcher Kantonalbank.
Yes. Also 2 questions. Maybe about prebuying in first quarter due to the price increases you announced for April. Can you give there any indication or maybe the underlying trend in April? Was it still same positive-ish as in the first quarter? That's the first question.
So April was obviously very strong because of the base effect. Keep in mind, last year April was down minus 30%, minus 29% to be precise, so we had a strong April. If we exclude this base effect, we still had a good April but not as good as what we have seen in the first quarter.
Okay. And then the next question, I appreciate that you gave some indication for Europe countries, that all countries were growing. I was a bit more interested in the countries that didn't have such a huge impact last year in, let's say, in March, COVID-related, so i.e., Germany and Switzerland. I assume that those 2 countries clearly were below-average growth compared to the overall growth in Europe. Is this a fair assumption?
I don't want to go into details on country. That's the reason why we are not presenting them. But I can tell you again that both countries, Germany and Switzerland, developed well with nice growth also in the first quarter.
And the next one is from Charlie Fehrenbach of AWP Finanznachrichten AG.
First question concerns the margin. You said the raw material prices will have a significant negative impact. Do we have to expect a lower margin in Q2 compared to Q1 this year, this 34.6%? Or will the margin be lower than -- also than Q2 2020, this 30.1%?And my second question is, you said trend for home improvement is difficult to predict how long it lasts. But can you say this at least, if it's still persisting for the moment? And the third, just an understanding question, you said your price increases in H2, the extraordinary, would it be 3.5% in average or 5%? I got 5% the first time. Maybe I'm wrong.
I start with the number 3.5%.
3.5%. Okay. Yes.
In average, and it's not covering the entire business. It's only covering the 2 product areas, Installation & Flushing Systems, and I think these are roughly 60% of the business. That brings me to your first question, we will not give guidance for the EBITDA margin in the second quarter. But what I said is that the raw material prices increase in the second quarter will be stronger than what we are able to compensate with sales price increases in the second quarter, which means that there will be a negative pricing impact from sales prices and raw materials on the EBITDA margin.And your second question was around the home improvement trend is currently persisting. At the moment, it is still strong.
Next question here is Matthias Pfeifenberger of Deutsche Bank.
Just one question from my side. You mentioned previously that basically the EBIT, the margins will revert to the usual corridor, like 28% to 30%. We have been at 31%, now very strong, very, very strong margins in Q1. And obviously, a very controlled margin impact in the second half, with potential upside from the home improvement trend continuing for longer than you would expect. So is it a fair assumption that it's not going to fall back below 30% for the full year?
We will provide, as usual, an EBITDA margin guidance for the full year with our H1 results, not at this point in time.
The next one is Patrick Rafaisz of UBS Europe.
Two questions for me, please. The first is on the EBIT bridge for this year. You already talked about marketing expenses being back to precrisis levels and -- but you also mentioned additional digital investments for the year of around CHF 15 million. I'm just wondering if we are on track for that number. Is that still the correct figure we should assume for the full year, and whether that already started in Q1? And the second question is a follow-up on an earlier question around potential pull-forward demand, and not necessarily because of your regular price increases, but with the extraordinary price increases for the second half, would you anticipate any pull-forward demand here to occur in the second quarter before these price increases [ are in back ]?
The first question, still the same. We plan to spend around CHF 15 million, 1-5 for the additional digitalization efforts. Nothing has changed there. On track. And also in terms of marketing expenses, we still plan and we have achieved, as I said before, in the first quarter, a normal precrisis marketing budget spend -- marketing spending. So we forecast also again for the full year, additional marketing expenses of CHF 25 million, excluding the onetime effect from the brand harmonization effect last year.And the second question was around -- pull forward in the second quarter. Yes, that's what we expect. Most probably, there will be a pull forward effect in Q2 due to the extraordinary price increase as of H2.
[Operator Instructions] And the next question is from Andre Kukhnin of Crédit Suisse.
I'll just go one at a time. Firstly, on raw materials, thank you for quantification for the second quarter. At the current spot rate, do you expect a further increase in second half in Q3 versus Q2? Or will Q2 be the full impact already?
Mr. Kukhnin, the same answer as in every call: I don't know. If I would know where the raw material prices go in the second half of the year, I would not sit at this table. I just don't know. We are not hedging. As you know, we have very short-term contracts. We do -- we do not know. And it does not matter, to be honest.
And this was not a question about where the spot prices will go. It's more about -- at the current spot prices, given the lead times that you have from purchasing to P&L. So will Q2 see the full impact? Or is this still kind of a follow-on, because we've seen, obviously, some of the spot prices trended off during Q1?
I would assume that we will see continuously raising prices in our P&L throughout the year because we have this lag in our P&L.
Got it. And the lag is 6 months, something like that?
That depends on the raw material price, I would say, maybe even a little bit less.
A little less. Great. And on the marketing expenses, again thank you for all the details you provided so far. I wanted to understand a bit better how this will play out later in the year when, assuming we begin to travel again, there's kind of ramp-up to the pre-COVID level already without travel. And when the travel kicks in, is the plan to then have a structurally higher marketing spend? Or will you then be swapping out the current virtual digital activities for real customer interactions and managing that overall marketing spend to be at that level plus the CHF 15 million specific to digital?
So the level we expect to be quite stable throughout the year, but the mix will change. At the moment, obviously, in the first quarter, it was a higher share of digital marketing spend. As soon as restrictions are lifted and we are able to do again physical events, that will shift back to more physical activities. But the -- in total, the amount should stay rock-stable.
Great. And I've tried it before, you said you can't, but I just check in case anything changed, but quantifying the restock or quantifying the stocking up effect in Q1? Is that possible at all?
No, that's not possible, sorry.
Okay. Just final one. Last call, you mentioned in an answer to a question on acquisitions. You mentioned potential for bolt-ons, sort of nothing transformational. I just wanted to check if anything developed in that area in terms of acquisitions, given obviously, the demand and trends have firmed up a bit and maybe some vendors are more willing to come forward now?
Nothing changed in this area, neither -- nothing on the screen at the moment.
The next one is from Christian Arnold of Stifel Europe Bank.
I have a question on your production capacities. I mean assuming now that the demand will stay on this very high level sales of CHF 900 million plus also in the next coming quarters. Do you have enough production capacities to handle that? When would you see additional capacities to be installed?
We do have enough capacity for this volume we are selling at the moment, but we are continuously expanding our capacity. For example, and we talked about that with our full year results in March, we expand our plant or one of our plants in Germany, in Liechtenstein, where we are manufacturing installation frames. We are also expanding capacity, meaning building and equipment in Poland or our main production plant. That is a continuous process, and we always plan also with spare capacity. Therefore, we feel comfortable with our current capacity and our plants and investments to be able to manufacture the current volume demanded from customers.
Do you face any shortage of your suppliers? I mean do you have any problems of getting the materials you need?
It's a very challenging situation. It's tight for many raw materials, but we are happy that we are able to get the material, sometimes a little bit delayed. But all in all, not a material impact. I think that has also to do with the fact that we treat our suppliers very much in a partnership way. I think that pays off right now, but it is a very tight and challenged situation. But we are able to manufacture, we get the raw materials and we are able to deliver the assortment to the customers.
Okay. Very good. Just clarification, the 3.5% price increase, that will be July 1.
That will have an impact as of July, correct, yes.
Okay. Okay. And my last question would be, back in March, you presented your sales and marketing activities with increased customer presence. So for example, customer trainings up 114%, mainly on the back of your digital initiatives. And I wonder if you could give us here some thought how it looked like in Q1, it will look like in Q2, if we see again some kind of this massive increase of customer training? So thinking about your Geberit Innovation Days, how does it compare to the year before your contact to your customers?
I don't have the exact figures in front of me, but I feel and I hear that, that is going very well. For example, this Geberit Innovation Days, which we have rolled out and organized in more than 20 countries, was quite a success in terms of number of participants, in terms of feedback from customers. So from that perspective, we believe we are doing very well for the first quarter, but I don't have the exact figures now right at hand, to be honest.
The next one is from Martin Flueckiger of Kepler Cheuvreux.
Actually, I've got 3. I was just -- 2 of them are clarification questions on what you said earlier on. When you talk about the 3.5% extraordinary price increases for 60% of the business, does that imply 2.1% for the group? That would be my first question. Then the second clarification question is on the marketing expenses that -- if I understood you correctly, you were saying, Christian, that they were going to be up by CHF 25 million in '21 excluding the impact from brand harmonization last year. Now if I remember correctly, brand harmonization incremental spend was CHF 10 million in 2020. So are we talking about a net increase of CHF 15 million for 2021 for marketing expenses? That's my second question. And the third one is, if you could provide us with an update on the latest survey on installer order books in Germany?
So the first question, correct, 60% of 3.5% is around 2.1%, correct. Number two, not actually not 100% correct. We spent last year, CHF 7 million for the brand harmonization. Originally, we planned for CHF 10 million, but actually spent only CHF 7 million. So your marketing bridge is minus CHF 7 million onetime effect from last year, plus CHF 25 million what we expect to spend this year for regular marketing budget. And the third question, the latest survey in Germany, a number we have is that the order backlog of installers increased substantially. It's now at 14.5 weeks, a new record level, a substantial increase, also confirming the strong home improvement trend going on in Germany.
Next question is from Manish Beria of Societe Generale.
This is again also on the pricing. So you said extraordinary price hike 2.1%. So also 1% is a normal hike. So we should build something like 3% price effect for the full year. Is this the correct way to look at it?
For the full year, we have the 1% to 1.5%. The 3.5% is for 60% of the assortment, which makes 60 -- which is around 2%, 2.1% on a group sales level, but only as of H2. So it's not a full year impact, obviously, if it's only as of H2.
And the next one is from Pierre Rousseau of Barclays.
Yes. It's been a few months now that we have extra public support for building energy renovation in countries like France, the U.K., Italy, and so I was wondering if you could update us with your thoughts on the EU renovation wave. How could that impact your top line mid-term? And do you still think it could be some competition for your product categories? Any thoughts will be welcome.
I thought -- I think that the most important trend we talked about quite a time -- quite a lot now is this home improvement trend, which is obviously typically renovation in the residential sector. But in general, just part of the COVID-19 situation in using this home improvement trend in many countries, still a high demand for renovation. For example, in Germany, there are a high number of apartments which need to be renovated. So that is an ongoing need for renovation in many European countries. And we have a disproportional exposure to renovation, therefore, we are very well positioned to benefit from this renovation demand.
[Operator Instructions] The next one is from Lothar Lubinetzki of Octavian.
Yes. It's very much a follow-up question on the last one. You were mentioning the -- what I would like to do is walk a little bit away from this quarterly view to take -- to hear more about your longer-term expectations, and especially about the renovation needs. I remember that after the German reunification, there was a big spike in new build activities for almost 10 years. So that must, I guess, have an impact on your medium-term demand in renovation, especially in Germany. Do you have any numbers to what was done 30 years ago and what you could expect, let's say, in the next 5 to 10 years to come?
You're right. The peak in terms of new build in Germany was in the mid of '90s as a result of the reunification. I don't have the number exactly now in my mind, but the number of new build apartments was significantly higher in the '90s than what we see still today. But I don't have the figures in mind at the moment. And you're also right that this peak in new build in the '90s, should lead to a renovation wave maybe 20, 30 years later. So maybe it has already started. We should benefit, or the market should benefit, from this renovation demand also in the coming years in Germany.
When I look at your business activities, lately it was very much home improvement trends, but new build is also quite a strong driver. So if new build slows down, could that be more than compensated by a pickup in renovation activities?
That's difficult to say. We have about 60% of our business exposed to renovation and 40% to new build. And obviously, if the positive trend in renovation is compensating the negative, maybe more negative than in new build, depends on the development of those 2 sectors, which we don't know exactly. Don't forget, we do not have clear figures on that because we do not know when we're selling products, is this product going into a new build activity or in a renovation activity. We are selling to wholesalers. So we actually have only estimates or even guesstimates about these segments, and even more difficult to talk about growth rates of these 2 different segments. If I can't provide the answer, I just can confirm we have a disproportional exposure with our product assortment to the renovation sector versus new build that is structurally, because we have many products which are kind of focusing on renovation solutions rather than on new build solutions.
The next one is from Cedar Ekblom of Morgan Stanley.
Two questions from me. The first one is back to the point on capacity, but rather than production capacity, can you talk about what you're seeing in terms of your installer network? In the past, you had flagged low skills or bottlenecks in the installer network as a potential hand brake to further revenue growth. And I'm just surprised considering how strong the growth has been in the first quarter, that you haven't mentioned that part of the capacity discussion? And then another point on margins. In the first quarter, your gross margins were lower year-on-year, and your EBITDA margins rose. And I just wanted to understand if we should think about a higher weighting of things like labor costs, potentially over Q3 to Q4 -- sorry, Q2 to Q4. I don't remember you talking about permanent cost savings post COVID. Just wanted to check that.
Number one, there is still a bottleneck of installers -- of qualified installers in many countries, I mentioned before the number in Germany. Our growth is very much driven by 2 factors. Number one is market share gains. I think our conscious decision last year not to reduce our customer presence, having our people maybe not in the field but digitally connected to our customers, pays off now. We have also been able to manufacture and to keep our availability on a high level last year. So that is one element. And the second one is, in Germany one of our main drivers is our upselling strategy. So selling higher value-added products. For example, shower toilet is a very good and important example, contributing substantially to growth in Germany, and it doesn't take substantially more installation capacity or installation time to install a shower toilet, for example. So this upselling strategy has upped the potential to deliver growth in an environment where we have still capacity limitations for qualified installers. And the second question I would ask Roland Iff to answer.
Yes, your observation is correct. The gross margin was slightly down. But nevertheless, there was still a positive impact on the EBITDA line out of pricing, the 30 basis points we are showing in our margin bridge. The big push on EBITDA margin comes from our operating leverage due to the high volumes. And we do not -- exactly have not -- that we will have significant changes in the personnel expenses. You remember, we mentioned various times last year that we did not restructure. So there will not be significant changes in the personnel line. We had some tariff increase this year in Q1 by 1.3%. We expect something around 1.5% for the rest of the year, but no significant cost savings related to COVID, for example.
The next question is from Marta Bruska of Berenberg.
I was wondering whether, do you have any data at all that would explore a little bit the relationship between what percentage of end customers that decides for energy-related renovation that would also renovate the sanitary part of their home? Or rather we should think of these 2 investment types as competing investment opportunities, please?
No, I'm sorry, we don't have such kind of a consumer data. We don't know.
So what do you expect?
We expect from the energy -- obviously, there are 2 effects from that. The one is the positive one that if someone, that end consumer, is renovating his house, his apartment due to energy-saving measures, that has a positive effect also for our business because most probably, you will also renovate your bathroom or maybe you even renovate your piping system. On the other hand side, that is the negative part. And since our products are not really contributing to energy saving, it might be also the case that these efforts are going more in, obviously, energy saving elements of a building, isolation -- insulation; for example, windows, heating, obviously, and that could have a negative impact, especially in markets where the installer, that's in Switzerland the case, in Germany the case, is doing heating and sanitary because that could then shift capacities of these installers to heating and not, let's say, to a bathroom. So that's also a negative effect. Therefore, all in all we believe that the guesstimate that these renovation efforts driven by energy savings has more or less a neutral impact on our business.
Your next one is from Martin Hüsler of Zürcher Kantonalbank.
I had two follow-ups, please. I remember that on the annual conference, you were quite cautious for the sector, hotels, retail obviously. I was just wondering what trends do you see in the market. Does this cautiousness materialize? Or do you see already signs of improvement here? That's the first question.
That's a very difficult question. Again, we don't have any exact figures, data to give you a sharp answer. But again, an indication that piping is still going weaker than the other 2 product areas might be an indication that these segments are suffering, as I said before, that's mainly new build and large projects which are suffering more or they're more exposed to piping, which is typically correlated to hotels or this, let's say, COVID-19 suffering segments like the retail sector, shopping centers, hotels, restaurants. Therefore, we believe that is materializing, to what extent is quite difficult. And as we said in the full year conference, we estimate that around 20% of our total business is exposed to this COVID-19-related suffering segments, which you mentioned before.
Okay. And then the second question is on your workforce that increased by roughly 200 people since the beginning of the year. I was just a bit wondering whether this is investment in sales force? Or if those are now digitizations people, maybe you can give us some more light?
That's mainly driven by additional people and also temps in the operation, in the plants, to produce the volume and to a lower extent, also by an increase in SG&A people, for example, for our digitalization initiatives.
And the last question for today is of Martin Flueckiger of Kepler Cheuvreux.
Yes. So it's a follow-up again. And correct me if I'm wrong, but if I understood you correctly, you were saying that the extraordinary selling price increase of around 2%, 2.1% in H2 would still lead to an overall increase in pricing for the whole year '21 of around 1.5%. Now at the risk of appearing a little bit pedantic, are we not rather talking about, 1.5% to rather 2% than maybe 1.5 -- 1% to 1.5%? Is it -- of course, it has very little impact on the growth, but there will be a significant impact on the margin. And hence, my follow-up question.
So I think that's a misunderstanding. Let's do the math again: 3.5% as of July for 60% of the segment means about 2.1% for the group as of H2. Since H2 is half a year, you divide by 2, and you're around 1% on the annual price increase impact of the extraordinary price increase implemented as of July.
As we received no further questions, I hand back to the speakers for closing remarks.
Thank you very much for your attention. We wish you all a great day. Bye-bye.
Dear, ladies and gentlemen. Thank you for your attendance. This call has been concluded. You may disconnect.