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Geberit AG
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Good morning. I am the entity operator for this conference. Welcome to the Geberit Conference Call on the Third Quarter Results 2019. [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, sir.
Thank you for the introduction. Good morning, ladies and gentlemen, and welcome to our 9 months results conference call. I will start with the third quarter key figures and then comment on 9 months development.Geberit achieved very good results in the third quarter with a strong top line growth and an excellent profitability supported by a weaker comparison basis from the third quarter last year and 1 additional working day this year.Sales increased by 1.8% to CHF 754 million negatively affected by the weak euro. Local currency sales growth reached 5.5%. We achieved positive sales growth in local currencies in all margins. Double-digit growth rates were recorded in Benelux with 18.7%; Middle East, Africa with 17.2%; Far East/Pacific with 16.2%; and Austria with 10%. Single-digit growth rates were realized in Switzerland with 7.4%; Eastern Europe with 5.1%; in the Nordic region with 4%; Germany with 2.2%; France as well with 2.2%; U.K./Ireland with 2.1%; Italy, 1.6%; the Iberian Peninsula with 1.3%; and North America with 0.2%.Turning now to the product areas. Installation & Flushing Systems sales increased by 8.7% in local currencies, Piping Systems by 4.2% and Bathroom Systems by 3.4% in the third quarter.Let me now comment on the financial results of the third quarter. The EBITDA increased by 8.4% to CHF 231 million. EBITDA margin increased by 190 basis points to 30.7%. This accelerated margin improvement in the third quarter compared to the first half of the year was mainly driven by 3 factors: first, the operating leverage from stronger volume growth in Q3; second, lower raw material prices this year; and thirdly, easier comps from raw material prices, which peaked in Q3 last year. Net income increased in Q3 by 11.6% to CHF 171 million compared to the adjusted previous year levels. And earnings per share reached CHF 4.74, an increase of 12.9% compared to the adjusted previous year number.I will now comment on our 9-month performance. Sales in local currencies grew by 3.9% to CHF 2.4 billion. This sales growth in local currency was almost completely compensated by a negative currency effect of CHF 81 million or minus 3.4% versus previous year. All markets delivered in the first 9 months positive growth rates in local currency, with the exception of Italy. In Germany, sales were up by 4% with strong growth in Installation & Flushing Systems and Piping Systems. In Eastern Europe, sales were up 1.4%, negatively impacted by a sales decrease in Russia and Turkey. In the Nordic region, sales increased by 2.3%, with strong growth in Installation & Flushing Systems. In Switzerland, sales grew by 3.8%. Sales in Benelux grew by 9% with similar growth rates in all 3 product areas. In Italy, sales declined by 0.4% in a weaker market environment and due to strong comparisons. Sales in France increased by 1.3% with strong growth in Installation & Flushing Systems but a sales declined in Bathroom Systems due to the exit of a low-margin business in ceramics. In Austria, sales grew by 6.9% with growth in all product areas. Sales in the U.K. increased by 7.6% driven by strong sales in Piping Systems. Sales on the Iberian Peninsula went up by 5% with strong growth in Portugal. In America, sales were at previous year's level. In Far East/Pacific, sales were up by 13.1% with strong growth in China. Sales in the Middle East and Africa region increased by 2% with strong growth in Southern Africa and a sales decline in the Gulf region.Let me now comment on the sales development per product area in the first 9 months, again, in local currencies. Installation & Flushing Systems increased by 5.8% with strong growth with behind-the-wall flushing systems. Piping Systems grew by 5.9% with strong growth in both product lines, supply piping and drainage piping. Bathroom Systems sales grew on previous year's levels driven by a weak market environment in the Nordics, lower sales from Keramag due to the brand phaseout, the exit of low-margin ceramics business in France and the strong comparison from strong sales for shower toilets in the first half of 2018.And now let me update you on the 9-month financial results. Geberit EBITDA reached CHF 732 million, corresponding to an increase of 4.8%. The EBITDA margin reached 30.8%, an increase of 130 basis points versus previous year. 50 basis points of this improvement were driven by the new accounting standard, IFRS 16. The remaining operational margin improvement was achieved despite the highest tariff increases since many years and extraordinary marketing expenses for the brand harmonization. The 4 main drivers for the margin improvement were: firstly, lower raw material prices; secondly, a positive product mix due to the upselling of our product portfolio; thirdly, the increased sales prices; and fourthly, efficiency projects and measures, combined with strong cost control and cost discipline. The currency fluctuations had no influence on the operating margin due to our continuous efforts to maintain a strong natural currency hedge across the entire group. The operating profit increased in the first 9 months by 3.2% compared to the adjusted previous year's level, negatively impacted by the currency [ fluctuation ].The EBIT margin reached 26.3%, 70 basis points above the comparable 9-month 2018 level. Net income increased over-proportionally by 4.1% compared to the adjusted previous year's level mainly due to positive onetime effects of the tax rate in Q3. Earnings per share increased to CHF 14.88 or 5.5% versus the adjusted previous year's level positively impacted by the share buyback program. Free cash flow increased significantly by 19.7% mainly driven by the strong operating performance and the positive development of the net working capital. The share buyback program has been continued according to plan. For end of September, 765,000 shares have been bought back for a total consideration of CHF 323 million.Let me now comment on our market view for 2019. The picture has not significantly changed since our publication of H1 results in August this year. The uncertainty and volatility of the economy and the building industry remains, and selected markets are slowing down driven by a weaker new residential sector.In Europe, we see overall a favorable but mixed construction market environment, although with a declining number of residential building permits in H1 2019. We remain confident about the construction demand in Germany, although the limited qualified installation capacity might remain a bottleneck. The building industry in Switzerland remains at high levels. In the Nordic region, the market is at best stagnating driven by a positive environment in Denmark, a slight growth in Norway, a stagnation in Finland and a decline in Sweden. In Italy and France, the markets are stagnating driven by a decline in new build segment, compensated by a more robust renovation sector. We see overall a declining market environment in the U.K. driven by the nonresidential sector due to the Brexit uncertainty. In Austria, the construction market is positive with a slight growth. We are also positive for Benelux, although the strong construction growth in the Netherlands over the last years led to shortages of qualified installer capacity. Construction markets in Eastern Europe remain mixed with the weak environment in countries like Russia or Turkey. And finally, the building construction sector on the Iberian Peninsula is further recovering.In North America, the institutional construction, the most important market segment for Geberit, is weaker than expected at the beginning of the year. In Asia Pacific, we see a mixed picture across the region, with a moderate increase of the residential construction market in China and the declining environment in Australia. The building construction industry in India is affected by the challenging general economic environment. And let me finalize our market review 2019 with the Middle East and Africa region. The market environment in the Gulf region is weak, and the building construction market in South Africa is stagnating. The markets in Northern Africa and the near East region remains to be mixed.And now a few words about the raw material price environment. The raw material markets remain uncertain and volatile due to the increased uncertainties in the global economy. After slightly decreasing raw material prices in the third quarter, we expect for Q4 a mixed picture with overall, again, slightly increasing raw material prices, mainly driven by stainless steel prices.And finally, let me briefly update you on the Geberit outlook 2019. We expect towards the end of the year somewhat weaker sales for ceramics due to the brand phaseout of [ further brands ] as of 2020. Q4 will also be negatively impacted by 1 working day less compared to Q4 2018. The sales growth in local currencies for the full year should be in the range of 3% to 4%. The EBITDA margin for the full year is expected to be around 29%. The full year tax rate should reach around 13%, and CapEx is expected to be in the range of CHF 170 million to CHF 180 million.This is the end of our introduction. We are now ready to answer your questions.
[Operator Instructions] The first question is from Fabian Haecki, UBS.
My first question is on the EBITDA margin guidance of 29%. So if I calculate correctly, that would imply a 23% EBITDA margin in Q4, so down 80 bps year-over-year despite the 50 bps benefit from IFRS 16. Isn't this a bit too conservative?Also as of -- at Q2 results, you already said Q3 raw materials will be mixed. Now it's also similar working, it will be mixed, slightly higher raw material, but it seems a bit overly conservative. Could you again elaborate a bit on your Q4 EBITDA or full year guidance?
First of all, keep in mind that we have seasonal volatility for the EBITDA margin. We have substantially lower margin levels in Q4. The implied EBITDA margin guidance for Q4 is not substantially different compared to previous years. And there are 3 specific effects this year for Q4. First of all, we expect a slightly lower sales growth, also driven by 1 working day less that has an impact on the operating leverage and effectively the margin improvement from operating leverage. Secondly, we are expecting overall higher raw material prices. The picture within is mixed, but all in all, we expect a higher price level in Q4 compared to Q3. And the third reason, we have the full impact of the extraordinary marketing cost for the brand harmonization but also the full impact of the increased -- tariff increase in Q4. That is the reason why we have a full year guidance of around 29% for the EBITDA margin.
Okay. Then another question on the Keramag phaseout. Have you -- have your wholesalers, have they kind of reduced inventories upon this event? Or did you see a relatively kind of smooth Q3 here? And what can we expect into Q4 on this phaseout?
We have observed that wholesalers reduced their inventory levels already in Q2 driven by the phaseout of the Keramag brand, and we do not expect that this reduction will be recovered in Q4 because, basically, the wholesaler space, they use this brand harmonization to get rid of slow-moving inventory articles. That's the reason why we do not expect a rebound effect in Q4.
Okay. And then the last one on APAC, which was up 16%, of course, there was also a good base effect. But at the same time, you were saying that the market is -- in APAC is quite mixed. What was driving your growth specifically in that region, also in the sense of China, India operation market?
It is basically driven by China, a growth by India; to a lower extent, by Australia. Of course, the market environment story in Australia is quite challenging, but the 2 big drivers for growth are China and India.
Okay. And do you expect this to be sustainable into Q4?
It's very difficult in these markets to make outlooks on a quarterly basis. As you know, we have a lot of project business in these markets. But with sales levels also in the various countries, therefore, quarterly outlooks are very difficult in these emerging markets.
The next question is from Ms. Zheng, Crédit Suisse.
I've got 3, if I may, if we can perhaps go on one by one. The first question is on Germany. Appreciate that we might be a bit [indiscernible] here, but the wording on the market outlook seems to have been [ tweaked ] slightly. Previously, it was stated as likely to remain limited due to the capacity constraints, and now it's reworded to remain limited. So I wonder if this change of wording is just because we are now towards the end of 2019, so we are seeing things happening and have more -- a bit more certainty on the capacity constraint limiting the demand there. Or is this a change of environment there as well?
No, there is nothing changed on our market view in Germany. And also in the wording, there's nothing changed. We have still the same expectation for Germany, strong demand but impacted basically by the bottleneck of installers. Nothing has changed there.
Great. And the second one is on raw materials. I wonder if we could just get maybe a sense on the 2020 development based on the current rates.
Can you repeat the question, sorry?
Yes. So on raw materials, you guided for Q4 to be higher year-on-year. I wonder if we could have an indication for 2020 as well just based on current rates.
I understand. No, we do not give an outlook of 2020 for the raw materials due to the simple reason that we don't know. It's, by far, too uncertain to have an outlook for the raw material prices. That is the reason why we are only giving you guidance for Q4 and not for 2020. There's too much risk involved.
Okay. Understood. And the third one is on marketing spend. You mentioned previously that in Q4, we are going to see the full impact of some marketing spend kicking in. And I wonder still if you could give some color on like, sequentially, how marketing spend is going to develop in Q4 versus in Q3.
That statement refers to our extraordinary marketing expense for the brand harmonization this year for Keramag phaseout. In total, we spent this year CHF 10 million for this brand harmonization where we just started as of Q2. So we didn't have a full impact in the first 2 -- the first 9 months. And in the last quarter, we would spend about 1/3 or roughly CHF 3 million from that brand harmonization exercise.
So sequentially, so Q3 should be -- sorry, Q4 should be of similar level to Q4.
Correct. That's right.
Yes. The very last question, so you've seen very strong growth for the quarter or actually year-to-date in regions like Benelux, Switzerland and Austria. So I wonder if it's because Geberit is taking shares in those regions or you're expanding the addressable market or because there are maybe some lumpy product lines in those growth?
I think you're referring to Switzerland and Austria, if I understood correctly. We believe that in both markets, over the last 9 months, we have been able to gain market shares, although we have already high market shares in these countries, as you know, very much driven by our value and upselling strategy.
Great. And what about Benelux?
In Benelux, the same. We are doing very well in Benelux. We believe also there that we have won market share. Especially in the Netherlands, the business is going very well. We have growth in all product areas, especially Bathroom Systems are growing nicely, driven by a good development of ceramics but also an excellent growth with our shower toilet business in Netherlands.
The next question is from Remo Rosenau, Helvetische Bank.
Could you potentially tell us how the growth within Bathroom Systems would have looked like, excluding the effects from the phaseout of the low-margin products and the Keramag brand switch, and what the breakdown between volumes and pricing looks like in this product area?
I'll start with the second one. In general, the price increase in the first 9 months this year for all 3 product areas was around 1.5%, somewhat higher than in previous years. If we look into the 3 product areas, there are no substantial significant differences in terms of price increases. So also in Bathroom Systems, the increased price is close around 1.5%.Regarding the sales effect from the Keramag phaseout exactly, we do not know the figure ourselves, of course, because that is basically a figure which was decided by the wholesalers. But we have just seen that we have clearly a slowdown of growth in Q2, but we can't quantify it. And therefore, we cannot just hand off potential growth figures right at this time. I'm sorry.
Okay. The same is true for the low -- phaseout of the low-margin products.
No. That's because, of course, because there we know what it was. One single customer, but we do not want to disclose because it's one specific customer. For competitive reasons, we do not want to disclose this figure. But this figure has a material impact on the growth in France, the exit of this low-margin business for ceramics in France. I can tell you that, but I can't give you the short figures. I'm sorry.
Okay. Fair enough. Then one more question, a bit more general one, looking back to the whole Sanitec acquisition after a few years, in retrospect. If you are completely open with us now, in which areas have you been somewhat disappointed compared to your initial expectations? And where -- I mean we know where you are happy because that is what we hear all the time, but where have you been somewhat disappointed because there surely are some areas where your original expectations were higher than the effective outcome.
That is the true answer, which I'll give you. We are happy with the acquisition. If you look at the top line, one of the main reasons for the acquisition was not the growth of ceramics. One of the main rationale was to grow -- faster growth of Installation & Flushing Systems. We have been able to accelerate the growth of behind-the-wall systems to around 6% annual growth over the last 3, 4 years, thanks to the synergies with ceramics. That was the main rationale. Secondly, we are much stronger in the shower toilet business nowadays compared to 3 years ago for Sanitec. You will have realized that we completely renewed the portfolio for shower toilet that was also driven and strongly supported by the acquisition of Sanitec.The reason why we are not in our midterm growth range of 4% to 6% -- also this year, we do not expect to be there -- is not driven by Sanitec, it's driven by the market effect. The 3 largest markets that we are operating: Germany, Switzerland and the Nordics. They are not growing at normal growth levels. Germany, we have the constraints of installers. In Switzerland, the market is doing very well, but on a very high level. It's not growing again like we have seen it between 2007, 2014. And in the Nordics, as you know, the building construction market, especially in some countries, is really starting to be in a typical decline. Therefore, coming back to the overall answer, we are happy with the acquisition and integration. Of course, on a detailed level, not everything is perfect, but overall, the picture is fine for us.
Okay. And about the implementation of all these cross-selling potential and synergies and so on, how much of that is now already effective? And is there still more to come?
As I said before, the main synergy for sales is on Installation & Flushing Systems. We are growing by 6%, at least 16 of the 18 -- or the first 9 months this year, we are growing strongly. For example, the 8.7% growth of Installation & Flushing Systems in Q3 was driven by double-digit growth in the European expansion markets due to the synergies of ceramics. We do not expect a further acceleration of that business due to the synergies in ceramics. That's the level which we're going to keep in terms of growth aspiration for the future in these European expansion markets.
The next question is from Pierre Rousseau, Barclays.
The first one is on Bathroom Systems. I think there's an inflection point there in terms of revenue growth. Could you maybe elaborate on what is driving that? We've talked about the better pricing earlier. But in terms of volumes, what's driving it? And what are your initiatives behind that? And what could we potentially expect in terms of incremental initiatives into 2020? And I'll go for the second question after your answer.
If I understood your question correctly, you were asking about the acceleration of Bathroom Systems in third quarter compared to the first half of the year. That was mainly driven by 2 factors. Number one, in the first half of the year, we had still a negative base effect from strong growth of shower toilets in the previous year. And secondly, the before mentioned phaseout effect of the brand harmonization in Germany, which had a negative impact in the first half of the year.
And going forward, to fuel that growth in Bathroom Systems, do you have more initiatives coming? Or is it mainly going to be driven by the penetration of shower toilets? What are you working on at the moment?
That is a mix of measures. One is the shower toilet growth, which is important for that area; but it's also the continuous modernization of the ceramics portfolio; and thirdly, new, more fundamental innovations for -- perhaps on ceramics. You might have heard or seen that we introduced a new bathroom series this year, Geberit ONE, which is the first product which we have brought to the marketplace on the joint development of ceramics, or former Sanitec, and also installation competencies of Geberit [ old ] . So it's a mix of shower toilet growth, modernization of the existing portfolio and structural new product introductions.
And the second question would be more on capital allocation in the midterm. Obviously, we know the share buyback continuation, but longer term, where do you see -- how do you see your capital allocation for this year? And where would you like to take the group perhaps in terms of geographic -- geographies, product areas, if you could comment a little bit on that.
So our strategy is based on an organic growth strategy. That means we do not foresee any considerable amount of money required for M&A. That means for capital allocation, that we basically want to distribute our free cash flow to shareholders in a combination by dividend payments and share buyback programs.
Understood. And the last question on tax. The full year guidance is quite low at 13%. So what do you see as a normal rate going forward?
Yes, for this year, we guide around 13%. Then starting in 2020 and the years after, that would be around 16%.
The next question is from Christian Arnold, MainFirst.
A few questions from my side. In terms of shower toilet, are we back on double-digit growth again in Q3 as the comps are not that high anymore? Then you're planning to phase out 3 additional brands in 2020. What does it mean in terms of the effects we have seen now for Keramag? So are you expecting the same effects or having some slowdown on top line on the back of that in the first half and then a normalization thereafter? And in terms of costs, do we also see a similar negative impact of CHF 10 million next year, also timing-wise, maybe from Q2 on to Q4? And the last question from my side would be on the material cost. You are guiding for slightly higher Q4 material costs versus Q3. Am I right in my assessment that year-over-year, Q4 material costs will be still quite lower than the Q4 material costs in 2018?
Question number one, yes, we have grown double-digit again in Q3 with shower toilets. Question number two, brand harmonization 2020, to remind you, we will phase out 3 brands next year. The first brand will start already at the beginning of the year in Q1. And the third brand will be phased out as of the second quarter. After the experiences of Keramag this year, we will expect also for next year maybe similar effects on a wholesaler level, meaning that they use this brand harmonization to lower their inventory level. So we expect somewhat lower ceramics sales growth next year. Third quarter costs, we expect the same marketing expenses story next year, again CHF 10 million for these 3 brands, so CHF 3 million more or less roughly per brand, distributed over the entire year, most probably. Third question, the material costs, you are right. And although raw material prices are expected to increase sequentially after Q3, the level should be still below Q4 last year.
Maybe a follow-up on the growth pattern from the 2 other product areas we have seen, the Installation Systems and Piping Systems. So here, we saw a clear increase of the growth in the Installation Systems versus a somewhat slowdown but still a very, very, very good growth in Piping Systems. Is this somewhat linked to, let's say, more renovation work versus a new construction work? Or do we have some other things playing a role here?
No, I would not put too much emphasis on that. That is really just volatility quarter-by-quarter. There's nothing specific to read into that.
The next question is from Jorg Schirmacher, Baader-Helvea.
I actually just have a few follow-ups on the previously asked ones. Again, on the regions, I was a bit astonished by the strong growth in Switzerland. You -- I think it's also the only one, only region where you've changed your wording compared to the first half. I think it was from a slight decline from high level to now remained at high level. You mentioned market share gains. Is there anything else that has changed maybe in the market here? Let's go maybe one by one. So I'll wait for your answer on that.
In terms of markets, we have seen a slightly better market, but it is better maybe than what we have expected at the beginning of the year. That is one effect. If we just look at Q3, the strong growth of 7%, that is mainly base effect. We have a weak Q3 last year, which was driven by the price increases of the first half year 2018. So basically, base effect and slightly better market than what we expected a couple of months ago.
Second question, on the rebranding. You mentioned 1/3 of the remaining costs will be allocated in the fourth quarter. So the third quarter, this quarter, was also 1/3 of the CHF 10 million.
Correct.
Okay. And then last one on the order backlog in Germany. I think you mentioned, first half results was around -- increased around 13 weeks. What's the current state here?
No news. That is still the same thing which we have. The order backlog of installers is around 13 weeks in Germany, nothing new there.
The next question is from Charlie Fehrenbach, AWP.
My first question, I think it looks right now as if there's no change in the situation about the shortage, about the -- with qualified installers in Germany, no improvement, no deterioration. And second question, maybe you could give us a figure what the growth potential in Germany would be if you wouldn't have this problem with the workforce. And the last question would be do you see any positive developments or problematic topics coming on to you in 2020.
Question number one, like I said that before, no changes regarding stopping of installer bottlenecks. The growth potential, if we would not have an installer bottleneck in Germany, I can't give you a quantitative figure, but I can confirm it would be higher than what we see currently. Could you repeat the third question, I didn't get that one, sorry.
Any developments, problematic or positive, coming on to you in the next year, 2020?
In general, we do not foresee a completely different picture. Although, as I said in my introduction, the markets are uncertain and we observe a slowdown in selected markets mainly driven by the new construction sector. If you look, for example, [ if you have seen the level ] on the residential building permits, the residential building permits were, in the first half of the year, slightly down around 2% minus after having been growing over the last couple of years. So no substantial different picture, a mixed picture, a challenged picture also for 2020.
The next question is from Manish Beria, Societe Generale.
Congratulation on very good results. So I will go one by one. I have 3 questions. The first one is -- so what was the raw material price inflation in Q3 and the 9 months?
In Q3 for -- the first 9 months, raw material prices were 1.6% below 9 months 2018.
And for the 9 months?
Sorry. That was 9 months. Sorry, I misunderstood. It was 9 months. For the first 9 months, raw material prices were 1.6% below previous year. And Q3 versus Q2 this year, we're minus 1.2%.
So Y-o-Y, it will be like 2%, maybe?
Maybe even a bit more, I don't know exactly the figures.
Okay. Yes. So fine. The second one, on your gross margin. So it improved by 160 basis points in the Q3. So you talked about the mix impact. So I understand some part is also coming from this raw material cost deflation, plus you're raising your price more. So there is a net price impact there, but how much is really coming from the mix impact? And also can you elaborate, I mean what is the mix impact? Is it because the lower-margin ceramics is growing slower or maybe you're getting a higher growth in shower toilet, that the high margin or the installer position? So maybe you can elaborate more how do you get this mix impact.
So the product mix effect is coming from 2 kind of product mix effects. One is on product level for the area, that's Installation Systems, Flushing Systems growing faster than Bathroom Systems. That's number one. But secondly, also within the product areas, within the product lines, the upselling of our product portfolio is supporting the product mix positively.
And how much it is in the gross margin of 160 basis points, this product mix impact?
It is a relevant part of it. It's a relevant part of it. It's a material part of it. But we do not want to quantify it. That's too much detail.
Okay. I understand. The third one is you talked about this tariff, and that is not fully built in, in Q3. So maybe you can remind, I mean like what was the tariff increase in the first half and how much it is in the Q3 and what do you expect for the Q4.
Can you repeat the question? Sorry.
The wage cost, the wage tariffs. You talked about like it is -- the full impact will be in Q3, so maybe how much it was in the first half, how much it will be in the Q3, maybe how much it will be in the Q4, so you -- can you give us some numbers there?
Yes. Understood. In the first 9 months, we are now at plus 3% tariff increases. I don't have the figure exactly in mind, but in the first quarter -- the first half was a little bit lower, it was a little bit lower. I can't give you the exact figure, but it's a little bit lower. The reason is that the implementation of the higher tariff increase was not everywhere at 1st of January. That was somewhat delayed, normally delayed at the [ middle ] quarters. But the 3%, which we have seen now for the first 9 months, that is also what we expect now for the full year, including Q4.
The next question is from Martin Flueckiger, Kepler Cheuvreux.
I actually have one -- only one left. Looking at your EBITDA margin bridge, as was previously pointed out during the call regarding pricing, net pricing was pretty good. I was just wondering, if I look at the price effect, the -- was it all just because of lower raw material prices? Or did you, again, in Q3, raise some selling prices in some countries and why?
No, we did not increase the sales price in Q3. The effect you see in the presentation is always both: it's raw material prices, it's the lower raw material prices; and also increased sales prices. And no strategic sales price increase in Q3.
And the next question is from Alessandro Foletti, Octavian.
I have myself as well only one last detail question. On the depreciation and amortization, if you can give a guidance for the full year and going forward, please.
There's no significant change to what we have seen now quarter-by-quarter. So it will remain quarterly on more or less the same level.
For the next year?
We expect an amount, which is a little bit below CHF 20 million, [ under CHF 20 million ] , for amortization, for amortization. And also depreciation, we'll develop in early.
The next question is from Marta Bruska, Berenberg.[Technical Difficulty] Okay. Sorry, we do have a brief technical issue here.Okay. So the next question is from Martin Flueckiger again, a follow-up, Kepler Cheuvreux.
According to my calculation, the tax rate was 10.7% in Q3. Could you elaborate what was driving that because that's significantly lower than what we've seen in H1. And yes, what you -- what is the expectation for Q4 and the key drivers there for the tax rate?
Your calculation is correct. It was 10.7%. It was a one-off, we could release some accruals. For Q4 -- for the full year, we are guiding a tax rate of 13%. That means Q4 will be just a little bit below that. So that means more or less in line with what we have seen last year in Q4. But it's a one-off for 2019. As I said before, 2020 and the year after that, mainly also due to the change in the Swiss tax, probably expect around 16%.
Yes, sorry. What was the tax off exactly -- this one-off in tax is exactly in Q3?
Release of accruals, but we do not give any more specifics.
There are currently no further questions. [Operator Instructions]
Okay. It seems that we do not have any further questions. Thank you very much for your participation. We wish you all a great and a good day. Thank you. Goodbye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.