Geberit AG (GEBN) Earnings Call Transcript & Summary

Good morning. I'm the Arkadin operator for this conference. Welcome to the Geberit Conference Call on the First Information 2019. [Operator Instructions] And the conference is being recorded. [Operator Instructions] 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 -- morning, ladies and gentlemen. Welcome to Geberit's full year sales conference call. We will first comment on our fourth quarter sales figures, then review our full year sales performance, followed by an outlook for the building industry in 2020 and, finally, summarize key priorities for Geberit this year. I'll start with the fourth quarter. Geberit achieved solid sales growth in the last quarter of 2019. Sales in local currencies grew by 1.9%, negatively impacted by 1 working day less and weak ceramics sales at the end of the year due to the phaseout of 2 further brands at the beginning of 2020. In Swiss francs, sales decreased by 1.1% to CHF 702 million, negatively influenced by weaker foreign currency. Sales in Europe increased currency adjusted by 2.1%. Positive sales growth rates were achieved in Eastern Europe with 7.9%; Italy with 7.4%; Switzerland with 4.5%; Iberian Peninsula with 4.4%, Nordic region with 3.5%, Benelux with 2.8%. Sales in Germany were on previous year's level. A sales decline was recorded in Austria with minus 0.5%; in U.K./Ireland with minus 1.2%; and in France with minus 5.9%, driven by strong comps and the brand phaseout of the local ceramics brand. Outside Europe, we achieved a growth of 1.5% in America. Sales in Far East/Pacific decreased by 2.3% driven by a sales decline in India. And in Middle East/Africa, sales decreased by 1.3% driven by the weak market environment in the Gulf. Turning now to the product areas. In the fourth quarter, Installation & Flushing Systems sales were on previous year's level after a very strong Q3. Piping Systems grew by 5.3% and Bathroom Systems grew by 0.5%. I will now comment on the full year 2019 sales performance. Group consolidated sales reached CHF 3.1 billion, corresponding to previous year's level. Sales growth in local currencies reached 3.4%. Sales in Europe increased by 3.4%. All markets recorded positive growth rates with the exception of France, where sales remained on previous year's level. In Germany, sales were up by 3.2% driven by strong growth in Installation & Flushing and Piping Systems. Sales in the Nordic Region grew by 2.3% with growth in all countries driven by strong growth in Installation & Flushing Systems and Piping. In Eastern Europe, sales were up by 2.9% with strong growth in Installation & Flushing Systems. Sales in Switzerland grew by 3.9% with positive growth rates in all 3 product areas. Benelux sales were up 7.4% with strong growth rates in Belgium and the Netherlands. In Italy, sales grew by 1.3%, negatively affected by a sales decline in Bathroom Systems due to the phaseout of the local ceramics brand in 2010. Sales in France decreased slightly by 0.4% with strong growth in Installation & Flushing, but sales declined in Bathroom Systems due to the exit of a low-margin business in ceramics and the phaseout of the local ceramics brand as of 2020. In Austria, sales grew with 5.2% with growth in all product areas. The U.K. recorded a sales increase by 5.3% with strong growth in Piping Systems. On the Iberian Peninsula, sales grew by 4.9% with sales growth in Spain and in Portugal. In Far East/Pacific, sales grew by 9% with double-digit growth in China. In America, sales were slightly up by 0.5% in a weaker than expected environment of the institutional markets. Sales in the Middle East and Africa region were up by 1.3% 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 for 2019, again, adjusted by currency effects. Installation & Flushing Systems sales increased by 4.5% with strong growth with behind-the-wall flushing systems. Piping Systems grew by 5.8% with strong growth in both product lines, supply piping and drainage piping systems. Bathroom Systems sales were on previous year's level, negatively affected by a weak market environment in the Nordics, lower sales due to the phaseout of selected local ceramic brands and the exit of low-margin ceramics business in France. I come now to our guidance for our 2019 financial results. EBITDA margin for the full year is expected to be around 29%. The full year tax rate should reach around 30%, and CapEx is expected to be in the range of CHF 170 million to CHF 180 million. The share buyback program has been continued in 2019. For end of 2019, 700,000 -- 765,000 shares has been bought back for a total consideration of CHF 323 million. Let me now comment on our outlook on the building construction industry in 2020. The geopolitical risks increased significantly, creating more uncertainties and volatility in the economy channel. However, the building industry is expected to remain rather stable, but globally with a mixed picture. In Europe, we noticed, since 1 year, a decline of residential building permits, leading to a slowdown of the newbuild segment this year, partially compensated by a robust renovation sector. Let me now comment on the individual company outlooks. We remain confident about the constructions demand in Germany, although the limited qualified installation capacity remains a bottleneck. In the Nordic region, we expect advanced stagnating market, supported by modest growth in Norway and Denmark and negatively affected by a decline in Sweden and Finland. In Switzerland, we expect a slightly declining market driven by a softer new residential segment. We remain positive for Austria, where the construction market should slightly grow. In Italy and France, we expect, for 2020, a stagnating market environment with a decline in residential newbuild segment in France. The construction markets in Eastern Europe [ remain due to ] mix with positive markets, like, for example, Poland, a stagnating environment in Russia or a challenging market in Turkey. We expect in the U.K. a stabilization of the declining market environment in the last 2 years. We are positive for Benelux with a solid growth in Belgium and only a flattish market in the Netherlands, due to a stricter enforcement of environmental regulations. The building construction sector on the Iberian Peninsula is further recovering, although at a lower pace than in previous years. In North America, the most important market segment for Geberit, institutional and commercial sector are expected to decline slightly mainly driven by the commercial setting. In the Middle East and Africa region, we expect overall a difficult environment for the building industry in 2020. There is no real visibility and predictability in the Gulf region driven by the political uncertainties and risks. We do not expect any upside. We're also cautious for South Africa due to the economic uncertainties and decreasing building permits, as the market environment in Northern Africa and the near East region remains mixed. Let me finalize our market outlook for 2020 with Asia Pacific. We expect a continuing moderate growth of the Chinese building construction margins. The growth expectations for the building industry in India are limited due to the lack of liquidity. In Australia, we expect a decline in construction market and the picture in North and Southeast Asia remains to be mixed. And now a few words about the raw material price environment. The increased geopolitical risks make an outlook for the raw material markets to be very difficult. However, we expect, for Q1 2020, slightly increasing raw material prices versus Q4 2019 driven by higher metal prices. Let me now comment on some of our business priorities this year. Besides regular new product introductions, we want to highlight 3 important topics for 2020. Firstly, and as announced already last year, we will further execute on our brand harmonization roadmap and replace 3 former Sanitec brands by the Geberit brand. These brand switches will lead again to extraordinary marketing costs of CHF 10 million. Secondly, we will further expand our digitalization efforts with dedicated initiatives, including the buildup of additional IT capacity. In total, we will increase our spending for digital initiatives by CHF 15 million this year. And thirdly, we will focus on various efficiency projects as part of our continuous improvement program to mitigate the, again, significant wage inflation in 2020. Despite the challenging market environment, we are confident to deliver also in 2020 decent results based on our strong market position, especially in Europe, our innovative product portfolio, our strong relations to customers and our efficient and performance-oriented organization. This is the end of our introduction. We are now ready to answer your questions.

[Operator Instructions] The first question is from Andre Kukhnin, Credit Suisse.

Yes, it's Andre from Credit Suisse. I'll do it one at a time. Firstly, on Germany, could you maybe give us a bit of color on what drove that sequential slowdown on easier comparison in the country, maybe across residential and nonresidential? And was there any change in the run rate of activity as you went through the quarter, please?

No, we have not seen any fundamental change in the market in Germany in the fourth quarter and also in the second half of the year. But indeed, we had a stronger first half of the year compared to the second half of the year, also driven by a stronger price increase in Germany obviously the first half of the year. But fundamentally, we have not seen any change in the market, also not during Q4.

Got it. And in terms of products on the Piping Systems that strong growth that's, I think, clearly beats the market in Q4 and the second half, was this the result of your new product introductions early in the year? And would you expect that effect to carry through 2020? Or was there anything kind of more one-off nature that we should be aware of?

Strong growth of Piping Systems in Q4 was not fixed. That was just quarterly volatility, which we always see from time to time. Of course, for the full year growth in new products, which we introduced the last couple of years were very crucial, I mean, very important. They contributed substantially to the growth rate of 5.8% in the full year.

And in terms of continuity of that effect of new product introductions, could you comment on that? I mean have you seen the effect in 2019? Or is this something that is more of a multiyear driver?

I'm not sure if I understood your question. Can you ask again? Sorry.

Yes. You launched some successful products at the beginning of 2019, from what I understand. And just wanted to get a gauge on whether we've seen the full effect of that in 2019. Or is this something that is still gathering pace -- or gathered pace during 2019 and, hence, will have a further impact in 2020?

The products, which we introduced in 2019, also in Piping Systems did not have a material impact on sales or growth rate in 2019. That takes more time.

Okay. Got it. And then on digital investment that you just mentioned of $15 million, could you talk about the payback expectations on that and maybe financially, but also in terms of what is that -- what is this actually going to bring to Geberit's? What capabilities were -- are you investing in?

I cannot talk about the payback because we do not have any payback calculation with regards to this digital initiative. It's basically just strengthening our activities, our position in digital -- in the digital area on 2 sides. Mainly, one is on the marketing side this year. For example, we will build up and strengthen our team for digital products data, the marketing side, but we also invest in more people in the digital product area. So it's a general execution of our digital strategies, and we do not calculate any payback. The payback will be [ definitely ] then on top line to market stronger and to have a better quality growth in the future.

Got it. And if I may, just a final very broad question. In terms of kind of growth rates, you're delivering, vis-a-vis, your midterm targets and the end market outlook that you've just given for 2020, it looks like it's maybe a touch more cautious versus what you said about 2019 a year ago. So I just wondered, looking at 2020, and obviously not inviting any guidance, I know it's far too early for that, but just conceptually, if you're facing end markets that are slightly less positive and, at the same time, having delivered sub-4% growth rates in the prior conditions, is there something there in 2020 that we can anticipate from kind of Geberit-specific drivers or your specific end market mix that can get you into that range?

So on a total market perspective, we do not expect a fundamentally different market this year 2020 versus 2019. Of course, on a country level, we are in some countries that are more positive. Obviously, we've got to be a bit more cautious. But all in all, I would say, we have pretty much the same expectations for the market in 2020 for what we have seen in 2019 already.

And in terms of specific drivers, is there anything in 2020 that can be different versus 2019?

No. In terms of the Geberit drivers, it's the same drivers as last year. We want to continue to outperform the market -- all our markets, either with the penetration of our technology or by upselling of our product portfolio, for example, to upselling the [ Geberit marketing ] initiative in Europe. So the strategy is the same. The priorities are, as I've already said, it's all about execution to continue also to outperform the market in 2020 as we did in 2019.

The next question is from Daniela Costa, Goldman Sachs.

I have 2 quick follow-ups. So the first one, in your commentary regarding raw material outlook. When you mentioned 1Q 2020, slight increase versus Q4 '19 due to metals, can you help us out doing the comparison year-on-year has throughout the year or 1Q? And also you mentioned metals, but I think plastic prices, somewhat like the styrene and the polypropylene prices have been coming down when -- and would you see later in the year benefit from that? That's my first question, and I'll ask the second one once you've addressed that.

The answer to the first question depends, of course, on how strong raw materials increased in the first quarter versus Q4 2019. But currently, we expect that the level in Q1 should be comparable to the level of prices in Q1 2018. Lower plastic prices in certain areas, that is true. That's -- we are also seeing that. We expect that to have an impact already in the first half of the year.

And then a clarification on the digitization spend. You mentioned CHF 15 million, if I heard it correctly. Is that incremental over and above what a normal run rate of IT or R&D to sales would be? Do you see that as incremental? Or are we just talking in absolute from a flat base?

I'm not sure if I understood your question. If you can...

I would say -- yes. So do you see -- maybe putting it another way, I guess, that those digitization initiatives fall into R&D spending or IT spending, do you see the ratio of IT or R&D spending to sales increasing? Is this CHF 15 million incremental? Or if sales would have grown, it would have grown at [ -- and with it? ]

For that part, which is going into IT, not all the CHF 15 million is IT-related directly, but that's true. Then that means that the share of IT cost versus sales is increasing, that is correct. But it's not all the CHF 15 million [ always right ].

And just -- originally, that's what I heard is 1-5. Is it 1-5 or 5-0? Sorry.

1-5. It's 1-5.

1-5. All right.

The next question is from Martin Husler, Zurcher Kantonalbank.

Just an add-on to this digitalization again. So it's all OpEx. Do I understand this correctly? It's not CapEx.

It's personnel costs and other OpEx. But it's all OpEx, correct.

Okay. At this stage, any CapEx guidance for 2020?

We expect CapEx figures to be around CHF 180 million for 2020.

Okay. And then my question to 2019. Of the sales increase of 3.4% in local currencies, what's your best guess on mix between price, up trading and volume there?

Price has definitely an important impact in the 3.4%. We have had a price increase of around 1.5% in 2019. And we will have a positive effect also from product mix in 2019.

So higher product mix. So of the rest, let's say, the 2%, it's rather product mix than increased volumes.

No, no, no. I didn't say that. There is a positive effect on product mix, but the large part is still volume.

Okay. And maybe just a last one. The outlook for the U.K., it was too fast for me. What's the outlook for 2020?

We expect for a stable market environment in the U.K. for this year.

Okay. And so no Brexit impact, so far.

No. We believe and we hope that for this year, that the decreased uncertainties now, we have an increased -- decreased uncertainties that should help also the construction industry. Therefore, we are a bit more positive for the U.K. this year compared to the last 3 years.

The next question is from Fabian Haecki, UBS.

Again, a follow-up question on your product development, particularly the strong piping. So it was quite an unusual year as piping growing stronger than installation business. If you could rank the growth rate of the 3 product groups for 2020, do you think installation would again be back to the top? Or would you expect a similar picture? This would be my first question.

I think that's really if you view that piping was especially strong in 2019 whereas installation positive. Also the year before, we had similar growth rates in Installation & Flushing Systems and Piping. So it has no structural difference in 2019 between the 2 product areas compared to the previous year.

So you think, structurally, Piping can grow the same pace as Installation Systems?

Sorry. Can you repeat?

So you think, structurally, Piping can grow at the same pace as Installation Systems?

I do not make any guidance, of course, for 2020, if you refer to that. But fundamentally, the potential to outperform the market with Piping Systems is similar as the potential to outperform the market in Installation & Flushing Systems.

Okay, okay. Then a second question. Earlier, you stated about the 2 brand phaseouts this year in Q1 and another 1 in Q2. Is this still the roadmap? Can you tell us which brands these will be for the next month?

Yes, nothing changed. We started to phase out 2 brands now as of January this year. One is Allia, that's the brand in France; and the second one is Pozzi-Ginori, that's the brand in Italy. And in the second quarter, we will start to phase out the brands in the Netherlands; that's Sphinx, the local brand.

Okay. And so a last one on [ previous point ]. It was quite a success story for the Flushing & Installation Systems over the past years. And you expect, again, a difficult 2020. You mentioned liquidity. Can you elaborate on the Indian market? Is it all kind of macro and liquidity-driven? Or is there any other things, product-wise, here to mention? Can you also give us a bit of feeling of the sales share in India? How important is this of your APAC revenues?

So India is one of the important markets in Asia Pacific. The challenge this year is that we have seen several projects which have been stopped or delayed due to liquidity reason. It's also reported that the number of unsold apartments in many of the top cities is decreasing substantially. It doesn't attract, of course, more money or investment into new projects. In general, the economy, as you know, is somewhat weaker than in the past. Therefore, we are more cautious, and we only expect limited growth also for us this year, 2020.

The next question is from Arnaud Lehmann, Bank of America.

My first question is regarding Q4 sales. You mentioned in your introduction that the work -- 1 working day less and also the phaseout of these -- of 2 further brands. Do you have an estimate of what the organic growth of the -- the growth ex currency would have been without these 2 factors or how much it contributed to the Q4 growth?

I have an estimate for the working day effect. One working day in Q4 means around 1.5 percentage growth. So if you adjust for the working day, the growth rate was around 3.5% in Q4, which was more or less in line with the full year or the first 9 months. I can't quantify the impact of the ceramics phaseout because we don't really know it exactly, but we just see that the sales was lower than what has been in the beginning of the first 9 months of the year.

Okay. Okay, makes sense. The second question is on the Asia Pacific region and the Middle East/Africa region. Sorry for -- it's a little bit of a basic question, but could you please remind me what are the key countries in each of these 2 regions that we need to keep track of?

The key companies in Asia Pacific are in China, India, Australia and North, Southeast Asia, that's Indonesia, Singapore, and also South Korea included in there. The key countries of Middle East/Africa is, of course, the Gulf, with all the companies in the Gulf, in Southern Africa and then a basket of smaller countries in the Northern Africa and Middle East.

And just to conclude, are you, at this stage, giving an indication of what your net debt position will be at the end of 2019? Or it's too early?

No, that's too early. We cannot provide any guidance on that.

The next question is from Martin Flueckiger, Kepler Cheuvreux.

I have 3, and I'll go 1 at a time. My understanding is that in the U.K., in 2019, you have seen some inventory buildups ahead of Brexit, which was originally planned for end of October. And now it looks -- or it's going to be this month. Do you expect any destocking post-Brexit going forward? That will be my first question.

It's difficult to know exactly what the stock level is currently. But if you look at the last 2 months in the U.K., our sales figures, they were very weak. So I would assume that we currently have more or less normal stock levels in the U.K. and therefore, we do not expect any specific effects in Q1.

Okay. And then, secondly, you've just mentioned earlier on that selling prices were up 1.5%. What is your expectation for pricing in 2020? Because the 1.5% was rather high compared to historical standards. Are we going to go back to 1%? Or are we going to stay at 1.5%?

You're right. 1.5% is rather on the high end compared to the last couple of years, especially in an environment where the raw material prices were decreasing. And that is the reason why, for this year, we plan, currently, for what is a normal price increase, around 1%, in 2020.

Okay, perfect. And then my third question, and I'll go back in line. You were mentioning the brand phaseouts, which have started -- which were also prevalent in Q4. And my understanding is that this was also an issue, at least, in the first half. Now with the reference to brand phaseouts in Q4, you're referring to the 3 or the 2 extra brands, i.e., Allia and Sphinx or Pozzi-Ginori. Which ones are you referring to with having an impact in Q4?

That's true. In Q4, the 2 brands, which we started to phase out in the beginning of this year. As I said before, Pozzi-Ginori in Italy, Allia in France. These 2 brands had an impact in Q4 -- or the phaseouts had an impact on the sales in Q4.

Okay. And sorry, just to clarify, do we have any indication on what you expect to be the impact on your organic growth, either in Bathroom Systems for the group on the whole? Because I seem to remember that in 2019 there was somewhat of a negative impact from the Keramag brand.

As I said before, we can't quantify if there's impact. No.

The next question is from Charlie Fehrenbach, AWP.

Regarding your sales growth target over the cycles of 4% to 6% and given the fact that the building industry in Germany, the last few years, was at a very high level as well as in Switzerland. And regarding also the fact that you didn't reach the 4% to 6%, 5 out of 7 times in the last 7 years, wouldn't it be more realistic to put this target down maybe a little bit to 3% to 5% or something? Question 1. And question 2, you may -- could repeat your building construction outlook for Germany and Switzerland. I didn't understand this correctly.

Your first question, you are right. The building industry in Germany and in Switzerland is on a high level, but it's on a high level which is not growing. And that is the fundamental reason why we are currently not in the range of 4% to 6%. 50% of our sales exposures, 18 markets, where the markets are not or only slightly growing. Switzerland is on a high level, maybe slightly declining, not again -- not in a growth phase like between 2007 and 2014. The Nordics, another 10% of our sales exposure, is at best stagnating, very much driven by the cyclical declines in Sweden and [ also a tailwind. ] And in Germany, the market is not growing as fast as it did in the past, driven by the bottleneck of installation capacity. So that is the reason why we are not achieving the 4% to 6% over last year. Your second question about Germany, we are confident about the demand, but the bottleneck, as I just said, of installation capacity remains a site for growth. And Switzerland -- in Switzerland, we expect a slight decline in 2020 of the building construction line.

The next question is from Christian Arnold, MainFirst.

One, two follow-up question on the phaseout of the 2 brands, Allia and Pozzi-Ginori. I mean you clearly stated that Allia had a negative impact in the development of France in Q4. However, when I look at Italy, Italy was doing actually quite well in the fourth quarter despite the phaseout of Pozzi-Ginori. Is that just a base effect? Or do we have here some different aspects we have to think about?

There's 2 effects. One is the base effect. It's true. We had also a very weak or easy comps in Italy in Q4. And the second one is the phaseout in Italy will not be only in Q1. It will be over half year, the first half of 2020. Therefore, the effect in Italy was also less or lower than in France. In France, we will do the phaseout in 1 quarter and -- in the first quarter. And in Italy, we will do it over 2 quarters in H1 2020.

Okay. And in the Netherlands next year?

That will be in Q2. That will be, again, only 1 quarter in Q2.

Okay. And then talking about the phaseout of Keramag, which already happened. Did it have a negative impact on Q4 performance in Germany?

No, we do not believe. No. We have had seen the negative impact of Keramag in Q2. That was the phaseout for last year. We do not have -- no signals or signs that in Q4 there was a negative impact. I have a change if you look at -- yes?

You said Q2. The negative impact in Keramag was in Q2 '19.

Yes.

Okay. And looking at your intended price increase of 1% for 2020, does this include a price increase in Switzerland? Or rephrasing the question, do we have to think about the price decrease in Switzerland on the back of the Swiss franc's strength we currently observe?

No, currently not. This 1% includes also price increases in Switzerland. We do not have any plans currently to decrease price in Switzerland, driven by currency.

The next question is from Bernd Pomrehn from Vontobel.

Two questions, if I may. Firstly, on Scandinavia. Here, we saw some improvement of your growth momentum. Do you believe this was just due to easier year-on-year comparables or fundamental market improvement? Or is this rather due to an acceleration of your sales synergies? And then the second question on wage inflation. Do you already have any early view on the level of wage inflation in 2020?

We expect, in 2020, a wage inflation of around 3%. So the same as we have seen in 2019. To your first question, can you repeat which you were talking about?

Scandinavia. There, we saw some stabilization or improvement. Is this more market-driven? Or will you -- are you benefiting from your synergies of the improved offering?

Are you referring to Q4? Or was it full year 2019?

Yes. Second half of last year, I would say.

Okay. There was no material difference. There was, more or less, volatility. Nothing specific in the second half 2019 versus first half 2019 in the Nordic region. So no volatility.

Next question is from Christian Korth, HSBC.

I have 3 questions. The first one is I would like to ask if you have an update from the order backlog of plumbers in Germany currently. Secondly, on the scope of efficiency measures, as you mentioned. When you said that you plan to mitigate the wage inflation, is it fair to assume that these various measures combined will have an impact of around CHF 10 million to CHF 20 million? And thirdly, I would like to ask if you have an early indication where the tax rates could be in 2020.

First question, the dollar backlog is at 11.7 weeks, that was in autumn 2019. That's a slight decrease from summer, but that's just seasonally driven. If you compare the figure with the year-on-year, it's a rather stable outlook -- no, it's a stable figure regarding the installer order backlog in Germany. But I can give you a second reference to this augment issue in Germany. The wait-and-see time in Germany, so the time it takes to fill an open installer position, has increased in Germany to a new record level of 200 days. We're taking average 200 days to fill an open installer position. That's the highest among all the professions in Germany, and it's much higher than a couple of years ago. As a reference, in 2014, it took around 115 days to fill an open installer position. So it's another indication that installer capacity issue is not lost in Germany. Question #2, we do not quantify our continuous improvement program, so I can't confirm you something of CHF 10 million to CHF 20 million. And question #3, we estimate or we expect the tax rate in 2020 of around 15%.

The next question is from Laurent Runacher, Exane Asset Management.

I was raising a question on the wage increase, which had been addressed. I just wanted to check if there is new development expected for trying to gather more light in North America.

Sorry, I didn't get the last one. To get what more in North America?

I just wanted to check if you have additional plan to try to get to a bigger size in North America or you're still following the same path.

Understood. No, there is no change of strategy in North America. We are following the existing strategy. Nothing new there.

And second question, regarding France, how would you break down the lower number we got in Q4? Apart from the phaseout of the brand, do you believe that they had some consequences and whatever social unrest? Or is it mainly 1 day left and lower housing starts?

No, there's 3 reasons in France in the fourth quarter. One, the working day effect; number two, the phaseout of the brand; and number three, that they consciously decided to exit some low-margin business in France. And that also had an impact, of course, in Q4.

We have a follow-up question from Martin Flueckiger, Kepler Cheuvreux.

Just one actually. We haven't talked about shower toilet yet. Can you talk a little bit about the performance of that business in Q4 and whether you still expect double-digit growth in 2020?

We are very satisfied with the shower toilet business. Also a good performance in 2019. We have been growing double digit, according to our plans. Also Q4, but also for the full year, we are very happy with the acceptance of the new product, which we introduced only last year. Over the last couple of years, doing very well on the shower toilet side and also positive for 2020.

Okay. Does that mean double-digit again in 2020?

Yes.

At the moment, we have no further questions. [Operator Instructions]

Okay. I think there are no further questions. Thank you for participating. We wish you all a great day. Goodbye.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.