Geberit sees improving construction sector after second quarter profits sink

FILE PHOTO: The logo of shower toilet and plumbing supplies maker Geberit is seen at its headquarters in Rapperswil-Jona, Switzerland October 30, 2018. REUTERS/Arnd Wiegmann

ZURICH (Reuters) - Geberit GEBN.S expects the construction sector to return to normal in the second half of the year provided there is not another wave of COVID-19-related lockdowns, the plumbing materials company said on Tuesday.

The outlook came after the company, whose bathroom products are used in new build and refurbishment projects, reported lower profit during its second quarter after it was hit by the closure of building sites and showrooms.

Geberit said its second quarter operating profit fell 20% to 161.9 million Swiss francs ($178.84 million) while net income dropped 24% to 131 million francs.

The Swiss company, whose results are seen as a proxy for the health of the broader construction sector, had previously announced a 16% drop in sales during its second quarter.

“Provided there is not another wave of lockdowns, management expects the construction industry to continue to return to normal during the second half of the year,” the company said.

But projects delayed or halted by the pandemic, along with the temporary closure of its showrooms, would continue to weigh on demand during the second half of the year, the company added, particularly in the non-residential sector.

As a result, Geberit expects its currency-adjusted net sales in the second half of the year to be slightly below the level of the second half of 2019, and, for the full year 2020, an operating cashflow margin slightly below the previous year’s level.

Reporting by John Revill; editing by Brenna Hughes Neghaiwi