Geberit AG ($GEBN)

Good morning, ladies and gentlemen. Welcome to our Q1 results conference call. Geberit had a successful start into the year 2026. Let me start with the key statements for Q1. First, an encouraging net sales growth of 3.4% in local currencies, negatively affected by prebuying of wholesalers in December last year and the cold weather in Northern Europe in January and February this year. Second, stable operating margins in onetime costs from the previous year are -- and currency effects are excluded. And the third, a growth of earnings per share of 4% in Swiss francs and 10% in local currency. Let me now comment on our net sales development in more detail. Net sales grew by 3.4% in local currencies to CHF 873 million, equally driven by volume and price. A strong negative currency effect of CHF 35 million or minus 4.0% led to a net sales decline in Swiss francs of minus 0.7%. We come now to the regional development. All growth figures refer to growth in local currencies. In Europe, net sales increased by 3% with growth in all markets, except the Nordics due to the bad weather in January and February. In the Middle East, Africa region, net sales increased by 13%. Sales in March also increased despite the war in Iran. Only a small portion of the business in March was affected by the war, namely shipments that were logistically disrupted due to the closure of the Strait of Hormuz. This currently still disrupted business accounts for less than 1% of group sales and is therefore, very limited on group level. The remaining business in the Gulf region, which is not served through the strait of our moves, has been and continues to operate at normal levels. This brings me to the other two international regions. In America, net sales increased in Q1 -- decreased in Q1 by 4% due to a softer project business. And in Far East Pacific, net sales declined by 1%, driven by declines in China, partially offset by growth in India. Let me now comment on the sales development per product area. Installation & Flushing Systems grew by 4% and Piping Systems and Bathroom Systems both increased by 3%. I will now comment on the operating and financial results. I'll start with the EBITDA development. EBITDA increased in Swiss francs by 2% and in local currencies by 7%, driven by the base effect from onetime costs booked in the previous year. The EBITDA margin reached 32.5%, an increase of 100 basis points, which can be fully attributed to the onetime costs last year. Excluding this onetime effect and in local currencies, the EBITDA margin remained stable. In Swiss francs, the EBITDA margin decreased only slightly, thanks to our strong natural hedge. Positive operational margin drivers were a positive net price effect driven by increased sales prices and slightly lower direct material prices. Secondly, positive operating leverage from the volume growth. And thirdly, efficiency gains. These positive margin drivers were offset by wage inflation of 3.4% and secondly, dedicated investments in marketing, IT and digitalization. The EBIT margin increased in line with the EBITDA margin by 90 basis points and reached 28.0%, supported by the before mentioned base effect. Similarly, the net income margin increased by 110 basis points to 22.4%. Earnings per share increased by 4% and reached CHF 5.94. In local currencies, EPS increased by 10% versus previous year. Let me start our market outlook with some preliminary remarks. The outbreak of the war in Iran and the heightened geopolitical tensions significantly increased the macroeconomic uncertainties. This makes the forecast of inflation, interest rates and consumer confidence, all important drivers for the construction industry, very difficult. The following market outlook, therefore, excludes potential impact of the war in Iran on building construction demand outside the Gulf region as these effects cannot be reliably quantified. Under the assumption, we continue to expect slight growth in Europe in the course of 2026. However, no broad recovery yet. Based on the stabilized building permits last year, we expect a stabilization of the new build activity this year. For the renovation demand, which represents around 60% of our business, we are more optimistic and expect a slight growth in Europe this year. Outside Europe, we foresee a mixed picture for the building construction industry. Some markets should see good demand, for example, India. Other markets will continue to decline, for example, China, due to the collapse of the new build sector in China. We continue to refrain from a market outlook for the Gulf region. However, and as already mentioned, the direct sales impact from the war remains very limited. Less than 1% of group sales are currently affected due to the closure of the Strait of Hormuz. The remaining business in the Gulf region is still running at normal levels. This brings me to the impact of the Iran war on the supply side. Regarding the availability of raw materials, we are not experiencing any interruptions. We continue to receive all raw materials required for our production facilities in the necessary quantities. On the pricing side, however, we are affected by substantially higher plastics and higher energy prices. Overall, we expect direct material prices to increase by mid- to high single digits in Q2 compared to Q1 this year and also versus Q2 last year, driven by higher plastics and energy prices. To compensate for the absolute cost impact of these price surges, we decided to implement an extraordinary sales price increase as of June this year. This sales price increase affects only plastic and energy-driven products and the magnitude will be differentiated by product categories. Overall, across the entire product range, this extraordinary price increase as of June amounts to approximately 2% of group net sales. Together with the regular price increase as of April and the already communicated extraordinary price increase for Copper Piping Systems as of April, we expect for the full year 2026, an overall sales price effect of 2% to 2.5%. Let me finish our outlook with a trading update for April. Like-for-like net sales in the month of April were up mid-single digits. Let me now briefly comment on the Geberit priorities this year. We will continue to have a strong focus on new products this year. For example, the new shower solution launched in April, but also important new products introduced over the last years, like, for example, the new Duofix, FlowFit, Mapress Therm and the shower toilet Alba. Other important initiatives this year include new marketing initiatives and further efforts in the area of IT and digitalization. In total, we are increasing our operational expenditures by CHF 20 million this year with these initiatives. Let me close our introduction with a short summary. Geberit had a successful start into the year 2026 with an encouraging net sales growth in local currencies. We increased our operating margins, thanks to a onetime effect last year. Excluding this base effect and currency effects, we kept operating margin stable despite significant wage inflation and increased OpEx for various strategic and operational initiatives. For 2026, we expect a slight growth of the building industry in Europe and a mixed environment overseas under the assumption that the war in Iran has no significant impact on the building demand outside the Gulf region. The direct sales impact of the war in Iran is very limited. Less than 1% of group sales are currently affected due to the logistical constraints to the Strait of Hormuz and to the Persian Gulf. On the supply side, we are not experiencing any disruptions and continue to receive all raw materials required for manufacturing. On the pricing side, we will implement an extraordinary sales price increase effective June this year to offset the absolute cost impact of substantially higher plastics and energy prices. Furthermore, and irrespective of the market environment and increased geopolitical and macroeconomic uncertainties, we will continue to invest this year in sales and marketing initiatives in innovation, in efficiency and in capacity to further strengthen our market position in and outside Europe in the short and in the long term. Thank you for your attention. We are now ready to answer your questions.

[Operator Instructions] Our first question comes from Daniela Costa from Goldman Sachs.

I have three questions, if possible. But first, I guess, given you're announcing the price rise in June, do you see any pattern of stocking up at wholesalers in 2Q or any worry that they will actually destock given the pricing levels that the products are getting to? Then second thing, just on raw materials, you very clearly said you don't really see any particular tightness or issues in getting hold of raw materials, but are you considering like stocking up more intensely? And how would that impact sort of like free cash flow generation this year, if so? And then the third one, just if you can do your usual comment for April start.

To the first question, yes, we believe that the extraordinary price increase as of June will have a prebuying effect. Obviously, wholesalers will try to buy at a lower level. So that will have a positive effect. Second question with regards to availability of raw materials, we have taken several measures. One of them, we have also increased our safety stocks. So therefore, we are confident that we will not run in any shortages in terms of raw material availability. And the third question was around April, but I really didn't get it. What was the question again?

Normally, you comment on how April has started.

I'm sorry, we did that in the introduction, maybe...

Sorry, I missed that.

So like-for-like, net sales were up mid-single digit in April.

Okay. And just on the second one, on the point, I was also wondering sort of like if you're stocking up -- are you stocking up more than normal on raw mats? Should we think about any impact on cash conversion this year related to that? Or is it wash throughout the year?

We've already done so by the end of Q1. So beyond that, at that point, we're not expecting much more. So any figures would already be reflected in the current figures.

The next question comes from Elodie Rall from JPMorgan.

To start with just a follow-up on this mid-single-digit sales increase like-for-like that you've seen in April. Does that -- do you think this is already positively impacted by prebuying given it's accelerated versus Q1? That's my first question. Second, the price increases that you are announcing, you said will be offsetting on absolute the cost impact. So what are the margin implications in your view at this stage? And lastly, can you give us a bit of color about the contribution from new products in Q1 sales?

First question about April. We announced this extraordinary price increase to customers in the second half of April. So most probably some of the April numbers were already driven by prebuying from wholesalers. Second question, we want to compensate the absolute impact of the raw material price increase with this extraordinary sales price increase. That means that there is a slight negative impact in terms of relative margins. And the third question, in terms of new products, we have had a very good start also with the new products into the first quarter. All the before mentioned new products were developing very nicely with significant growth also in the first quarter.

The next question comes from Martin Hüsler from Zürcher Kantonalbank.

My first question is, can you talk a bit about Europe and if you saw diverging trends, except maybe for the Nordics that you mentioned, but what do you see in the, let's say, three, four biggest markets? That's my first question.

So the, let's say, biggest impact -- extraordinary impact we have seen in Q1 was the weather in Northern Europe in January and February, which affected sales negatively. However, March was already much better and some of the lost sales due to the weather, we think, have been compensated in March. Secondly, we have not yet seen any direct impact from the war in Iran on demand of the building construction industry in Europe. I think these are the two most important remarks to the market in the first quarter in Europe.

Okay. And if you could share, let's say, one word on Germany.

Germany is the same as what I just said for Europe. In Germany, obviously -- also the northern part was more affected by the bad weather, but the fundamental demand has not been affected. We expect for Germany overall this year, a stable, maybe even slightly positive market, also supported by the new build. Building permits have now been growing in Europe -- sorry, in Germany for the residential sector for fourth quarters in a row. Overall, building permits for the residential sector were up 2% last year. Also the first 2 months, January and February, building permits were quite significantly up in the residential sector in Germany. Even the nonresidential sector started to stabilize as well for the last 2 quarters in Germany. So we are, let's say, quite optimistic for a stable or slightly positive market in Germany this year.

That's helpful. And then maybe my second question is about the extra spending on marketing and digital initiatives. You already mentioned them for Q1. I thought they were a bit back-end loaded. Or should we really assume them to happen like a quarter-by-quarter, roughly CHF 5 million plus?

So one does not exclude the other. So yes, we already had cost in Q1. But yes, they're ramping up in the course of the year, but they had in Q1 a slightly higher effect than the CHF 20 million of last year.

The next question comes from Martin Flueckiger from Kepler Cheuvreux.

I've got three questions. The first one is on the consumer sentiment in Europe. We've seen that particularly with regards to expectations for financial conditions in households, the consumer sentiment is falling sharply. Are you not concerned for your business as we move into H2 and 2027 that this will have -- this will start to have an impact on your business? That's my first question. And the next one, the second one is on the development of showroom visits in Q1. I was wondering whether you had any data to share or observations to share with regards to showroom visits, whether there was some positive or negative momentum, that would be helpful if you could elaborate on that. And then finally, my third question is on the volume mix and pricing effects on the EBITDA margin in Q1. I was a little bit surprised by the volume mix effect, which, to my mind, looked a little bit lower than what I had anticipated at least. I was wondering whether there was a negative mix effect in there or how -- whether you could provide a little bit more color on that. And with regards to the pricing effect on the EBITDA margin, that was a little bit higher than -- more significantly higher than what I had anticipated. So I was just wondering whether it was all just raw material price driven or whether there were any special selling price effects in there.

I'll start with the third question. The price effect in the first quarter was a bit higher than what we also expected. Roughly half of the net sales growth in local currencies of the 3.4% was driven by pricing. And there is a little bit higher pricing effect. We had also a higher net price effect in the EBITDA bridge. And in other words, a little bit lower volume growth, and that means a little bit of lower volume effect in the EBITDA bridge. The second question about showrooms in the first quarter, no specific observations or data. We didn't hear any specific remarks from any specific regions with the exception maybe obviously, of the Gulf region, where the situation has an impact on the showroom activities. But apart from that, we didn't hear any specific observations or activities or changes in activities in showrooms in the first quarter. With regards to consumer confidence, consumer confidence might be a driver for some private business decision. It may be. We have not yet put a lot of efforts into better foreseeing what might happen with the consumer confidence in our business. Important for us is that we are prepared to whatever might happen in the second half of the year. So we are not very much worried at the moment about the topic you mentioned with the consumer confidence.

The next question comes from John Revill from Reuters.

Okay. So I was just wondering, just on your outlook, it's basically the wording is exactly the same as it was at full year. And I just wondered if you just thought -- as the situation the conflict is still going on in the Middle East, is it more of a concern now because it seems to be lasting longer? Or is there more of a concern around that? Or is the situation more serious do you think because it's basically continuing? And then secondly, could you just expand a bit more on the channels, how it affects you in terms of -- I know you talked about inflation and consumer confidence. But I mean, how else could affect you? I mean it's not affecting you directly. You say only about 1% of your sales -- in the group sales are affected by currently at the moment. But on the broader thing, I mean, could this lead to higher interest rates because of feels like inflation, which therefore, weighs on construction. Could you just give us a little bit more of a kind of general view of how the macro situation could be affected by the Middle East and how that would then weigh on the construction sector?

First question, you're right. Our outlook is not substantially different to what we said 6 weeks ago or 7 weeks ago with our full year results because we haven't seen any impact on our markets from the situation in the Middle East, for example, on Europe at the moment. Which brings me to your second question is exactly what we tried to say in our introduction. We are not the macro experts. We do not know what are the potential impact from the war in the Middle East or in Iran to the macro environment, to interest rates and then indirectly, obviously, build the construction demand since this is not part of our circle of competence, we are not putting a lot of effort into that. We're putting our effort into being at best flexible whatever might happen. For example, we've talked about that before, ensuring the raw material availability, making sure that we take the right pricing decision. So we are preparing to all the scenarios, and we are not speculating on what might be the impact of the Middle East on the consumer confidence in Europe.

Excellent. Okay. And just also you announced this extraordinary price increase of 2%. Do you think that -- I mean, could there be -- do you think that's going to be it for the year then? Or do you think there could be -- or you're not ruling out there could be something else later on then if prices go up substantially again? And also what was your normal price increase for this year as well?

So we did a normal price increase of around 1% as of April, which turned out to be a bit higher, as I just explained before, due to various mix effects. We did a second -- we did -- sorry, first extraordinary price increase only for copper pipe systems, that's a relatively small part of our business as of April and now this extraordinary price increase for plastic and energy-related products. And with that, we try and we will compensate for the absolute impact of the raw material price increases. What will happen in the rest of the year, that also depends obviously on the raw material pricing side. At the moment, we feel comfortable with this second extraordinary price increase of around 2% as of June.

The next question comes from Arnaud Lehmann from Bank of America.

My question is relating to other costs, fixed costs in particular. I think in Q1, your personnel costs are down a little bit 4%. I guess there's some currency effects in there. But could you talk about what other costs you're expecting, including wages for the year? And do you think that the price increase and the efficiencies will be enough to offset these other costs, please?

So we're not commenting on the full year margin. But on the bit on piece that you asked, on the personnel expenses, yes, it's minus 4% in Swiss francs. Currency adjusted, it was slightly down only. It was wage increase of 3.4% in Q1. We expect for the full year wage increase of roughly 3%. Apart from that, no special effects to be mentioned.

And my second question, if I may, just on raw materials availability. You said there's no -- you haven't had any issues so far. Could you give us a bit of color on any -- I mean, I guess, in your European operations, are there any energy or raw materials that are sourced from Asia? And have you seen any shift in the availability of these products? And did you have to make any adjustments in your supply chains?

No. Our raw material supply is very regional and local. So most raw materials which we use in Europe is coming from Europe as well. Hardly any materials coming from Asia into Europe and almost no material coming from the Middle East.

The next question comes from Cedar Ekblom from Morgan Stanley.

I just had a follow-up question around the new product introductions. You spoke qualitatively around good adoption, positive trends there. I wonder if you could give us a little bit more quantitative color on how much of your volume growth in the first quarter came from new product introductions and also some quantitative view on what you think new product introductions can contribute to the top line in 2026?

I can't quantify the exact number of the contribution of new products into the volume growth of the first quarter, but I can give you an indication. In average, we generate about 20% of net sales -- annual sales with new products. The growth contribution also in the first quarter of the new products was more than 20%, although I don't have an exact number in mind.

The next question comes from Yassine Touari from On Field Investment Research.

I think just a bit of a clarification on the pricing. So it seems that your pricing in the first quarter was approximately 1.7%, could you explain a little bit what is the mix effect and what is the execution of the price increase, which was higher than expected? And you're mentioning a mid-single-digit like-for-like growth in April. Is it fair to assume that it's the same kind of like a price increase, 1.5% to 2%? Or was the mix effect different?

So to the first question, the mix effect which we have in pricing are of various nature. First of all, keep in mind, we have 10,000 of article numbers in SKUs, and we have a differentiated pricing approach in general. So we don't increase every product exactly by the same price increase. So it means you have a mix effect just from the assortment. We have a mix effect also from the type of business. For example, project business versus standard business, you have some fluctuations there that also has an impact on pricing, obviously, project versus standard. We have geographical mixes. And in the first quarter, it turned out that all these mix effects turned more or less into the same direction. That's the reason why our price effect in the first quarter was somewhat higher than what we also expected internally. And the second question was about April, if that was also driven by the price effect? Yes. Obviously, that was driven by the price effect as well. We don't know yet the exact number, but that might have been most probably in the same range as in the first quarter.

Is there any reason why this mix effect should be more normal in the future? Or is it -- or do you think this positive mix effect could be sustained for the year?

No, that's more also coincidence. It some coincidence, sometimes you have just a lot of statistics that things go in the same direction. So that's not a structural effect. It's just by coincidence. That's the reason why pricing is not an exact science. It's quite hard to predict the price effect of 10,000s of articles, including project business, including rebate systems, including different systems country by country. But it's just statistically nothing to bother. It was a bit higher than expected. Sometimes it's a bit lower. So nothing to put your brain force into.

So your pricing view for 2026 of 2% to 2.5% excludes any mix effect. Is that the right way to look at it?

It includes the mix effect, which we have seen in the first quarter, of course, because that's actual.

The next question comes from Christian Arnold from ODDO BHF.

A follow-up question on the pricing. You told us that the last extraordinary price increase as of June has been announced second half of April. Could you remind me about the extraordinary price increase for copper? When have you announced that to the wholesalers?

That was, I think, second half of February, but I can't remember exactly. I think it was second half of February. But don't overestimate the effect because copper is relatively small.

Okay. And it's also in the magnitude of around 2%?

The price increase was around 5% or exactly 5%. But I mean the share of sale of copper pipe systems is not too big. That's what I meant.

Clear. Then on the region, Middle East, Africa, I mean, you were mentioning that the impact was not that much in the Gulf region, although in the slides, you say growth in all markets except the Gulf region. So there is some kind of decline. Even more, it's impressive that you reached this 13.5% growth. So can you explain that a little bit? I mean, is South Africa booming or what's happening there?

You can divide the Gulf region at the moment into two parts. One part is the part which is served to the Strait of Hormuz. And the other part, for example, Saudi Arabia, where products are shipped and delivered not to the Strait of Hormuz, but to the Red Sea or on the land transportation way. And the only part which is affected within the Gulf is the part which is served to the Strait of Hormuz, and this is less than 1% of group sales. The rest of the Gulf region is running relatively normal. For example, in Saudi, we have growth in all 3 months also in March. But all in all, this Gulf region was down in March and in this first quarter.

Which means then the Africa region is growing 20% plus.

The rest of the Middle East, Africa region is doing very well, correct as well.

Okay. And then maybe a follow-up. You were saying that in Europe, you have not experienced a shift in demand pattern due to the Iran conflict. Nevertheless, what we also observed is that we have a boom in heat pumps. So I wonder how big the risk is that actually capacities of installers are moving away from sanitary more to heating solutions. Any comment on that?

We didn't hear anything from wholesalers or plumbers in the first 3 or 4 months with regards to heat pumps, to be honest.

The next question comes from Patrick Rafaisz from UBS.

Two follow-ups, please. The first would be on what you just described on the impact of the Strait of Hormuz. Can you add a bit more color? Is that purely a geographical impact, the less than 1% that's affected by logistics? Or is that affecting certain product groups disproportionately?

It's purely geographical.

Okay. Good. And then the second question is a follow-up on pricing and trying to understand the margin impact. I understand what you said that the price increases are here to cover higher costs and could be dilutive on the mathematical margin. But is it also fair to assume that for Q2, you still have enough safety stock of raw mats that you can cover or bridge April, May until your price increases hit so that you don't suffer an adverse effect?

So no, I think that is not true. So it's not that we have so much raw material stock that we can produce with cheap raw materials, so to say, in the second quarter. So the raw material prices will be affected in the second quarter, as we said, substantially by the increased plastic and energy prices, mid- to high single-digit increase. However, and I think that's your question. However, the sales price impact, we only have an impact as of June. So there's a certain delay effect, which is a conscious decision. We always want to give our customers, wholesalers, also plumbers, the opportunity the to increase their prices, for example, for a project in the coming weeks. That's the reason why we have a certain delay effect, which will also impact the margin in Q2.

The next question comes from Vithushan Vijayakumar from Baader Europe.

Just coming back on the margins, please. So Q1 came in slightly ahead despite wage inflation and higher spending in IT, digitalization and marketing. I mean, should we view the Q1 gross margin performance as probably sustainable into Q2, Q3? Or was there any temporary benefits from timing mix or procurement? And the second question would be rather on regional mix. So Europe held up well and Middle East, Africa remained rather good, so strong, while Americas stayed weak. Could you elaborate on what is driving the softness in the Americas and whether you expect this to remain a drag through 2026, please?

I take question number two. Tobias will answer question number one. In America, we have been affected by a bit of softer projects business in the first quarter. That was the main reason why sales were slightly down in the first quarter. Question number one, Tobias, please.

As for the margins, on Q1, year-on-year, the one thing to remember is that in Q1 last year, we had a special cost for the closure of the one factory, Wesel. But if you look at the current year and sequentially, Q1 is representative in terms of cost for the rest of the year. I said there will be a ramp-up of the CHF 20 million. But margins obviously will be impacted by the said effect of pricing increases and the cost material. But as always, we're not speculating or giving any guidance on the full year outlook of the margin. But in terms of cost, nothing special to expect.

The next question comes from Alessandro Foletti from Octavian.

I have two quick questions maybe. One on the Bathroom Systems actually, which was growing in line with the Piping System. I was a little bit surprised because I thought it might be growing faster. We have had a couple of quarters with good growth there. And honestly, I thought it was due to the new shower toilet, which should be my expectation, a sustainable growth story. So I was wondering what happened there.

First of all, a general remark, don't put too much emphasis on quarterly numbers also on the product area. But behind your question, I think it's a question how is shower toilet doing? In the first quarter and shower toilet is growing very nicely. We are growing double digit in terms of sales, but also volumes. The growth driver is still Alba, the entry-level product. Obviously, growth rates are coming down a bit now for Alba because the base is obviously growing now after 2 years having the product in the market. But also very important, our premium product is also doing very well. Mera is still growing, not double digit, but it's nicely going also in the first quarter as last year. And also Sela, the mid-level product is not cannibalized. So a very similar picture to last year, although growth rates from Alba are coming down, obviously, due to the higher base.

Right. So if I may follow up here, does it mean that the rest of your bathroom product portfolio then had, for whatever reason, a bit of a slower quarter?

No, I wouldn't say so, no.

So okay. Obviously, my estimates are wrong, but the fact that the growth rate sort of came more down is maybe more due to this base effect then?

Yes. So shower to growth rate also driven by Alba, obviously, as a group for also came down due to the higher base effect -- higher basis, sorry.

Right. Okay. And second question is really a small thing, but I saw your employees or full-time equivalents went up this quarter from 2012. Can you explain why that was the case where you are employing more people?

It's a pure volume effect with more volume, it's more people. And then part of the CHF 20 million increased cost also has the effect, but that's really the minor part. So the predominant part is the pure capacity volume effect in the plant.

Right. And with that respect, the investments you're doing in Northern Germany and Sweden for the logistics, will that have then at some point, a bigger effect on that? Or it will be more?

It will, but that's really many years out before -- I think we mentioned it will come in operation towards the end of the decade. Don't expect more people because of the before that.

The next question comes from Charlie Fehrenbach from AWP.

The price increases again, I've got the one for plastic and energy of around 2%, the copper one of 5%. I'm not sure with the ordinary price increase in April, is it 1% or 1% to 1.5?

It was 1%, but it was planned, it was a bit higher than what you originally planned.

Okay. A bit more than 1%. But it's not reasonable to add these three increases for the price increase a total of 8% or more?

No, because the 5% for the copper, don't take it on the group level.

Effect on sales in full year is 2% to 2.5%.

Exactly. You take all the three.

And my second one, you indicated for a wage inflation of 3% in the full year in March. I didn't hear anything to that. Is it still this 3%?

Absolutely.

The next question comes from Bastian Benrath-Wright from Bloomberg News.

I just have two quick questions on an event that's upon us next month, which is that, as I'm sure you're aware, there's a vote being held in Switzerland aiming to cap the population of 10 million people in June. My question is, do you expect this -- if it goes through, which the polls indicate for now, do you expect this to have any impact on your business, for example, on recruiting given that you are growing your workforce?

No, we don't think that, that will have a substantial impact if you talk specifically about recruiting because the most people we are recruiting are people already living in Switzerland and a very small part of the people which we are hiring here in Switzerland are coming directly from abroad.

Do you have -- just a quick follow-up. Do you have any sort of contingency plans? Or you just don't think those are necessary?

No, there are no contingency plans.

The next question comes from Nathalie Olof-Ors from Agence France-Presse.

I'd like to double check one thing. In March, during the annual press conference, you said the Middle East is around 3% of your turnover. So just to clarify, why did you talk about a 1% impact on the Strait of Hormuz? Well, I'm sure there's a good reason, but can you explain why you talk about 1% for the Strait of Hormuz. And back then as well, mid-March, we were -- it was really early in the conflict, but you already mentioned back then, you had already seen a small increase in plastics. Can you explain us what happened in between -- in those 2 months? And when did you decide that a price increase was necessary? What did you see changing in the market over these last 2 months?

So the first question is, you're right, we generate in the Middle East region as a whole around 3% of sales. but only less than 1% is supplied through the Strait of Hormuz, and that's the business which is currently affected. And the rest of that region is not affected. For example, Saudi Arabia, this business is running at normal levels. It was even growing in March. That's the difference between the 3% and the less than 1%, which is mentioned in the introduction. In terms of raw material pricing, the reason why we have now decided to increase prices was driven by the fact that raw material prices accelerated and also were not only affecting commodity plastic, they started also to affect technical plastics. So a stronger price increase of commodity plastics and also affecting the rest of the plastic assortment led to the conclusion that we need to compensate with an extraordinary price increase.

And on Saudi Arabia, you're mentioning that so far in March, the sales still held quite well in a country like Saudi Arabia where activity wasn't too much affected. But what about orders? Do you think -- is it because of the construction sites that were already started at the beginning of the conflict? And do you see demand becoming more tepid in the coming months? Did you see a decline in new orders?

Not at the moment. As I said, at the moment, they are good where projects are executed, projects are running. I don't want to speculate what might happen in 6 months, in 9 months. But at the moment, the business is going on relatively normal.

The next question comes from Harry Dow from Rothschild & Redburn.

I've got two questions. Just firstly, a follow-up on the raw materials costs. When you look at the spot commodity market for plastics and metals, I know you don't buy a lot of direct commodities, but commodity prices, I guess, will be reflected eventually in terms of your supplier increases. If the commodity prices stay as high as they are, do you think your suppliers have put through as much sort of price increases they need? Or do you think you might see more later in the year if commodity prices sort of stay where they are? And then just secondly, on distribution costs, I think outbound freight is around maybe 3% of sales within sort of other operating costs. Do you have a sort of view on expected inflation on those sort of freight costs? And is that also reflected in the price increase?

Freight costs are going up to your second question. They are going up because of higher fuel prices. That's also the reason why we said that we increased price is energy driven because we have to account for higher freight costs also during the rest of the year due to increased fuel prices. Can you repeat your first question? We didn't really understand the question.

The first question is just on -- when you look at sort of the spot market for commodities, I suppose you're buying raw materials from your suppliers that are buying sort of closer to spot commodity prices. Do you think the price that you're paying for raw materials in the second quarter fully reflects what you're seeing in the spot market? Or do you think there might be more price increases as you go through the year if commodity prices stay as high as they are?

No, we believe that the increased commodity prices, for example, the oil price, which has increased that this is now reflected in our forecast for the second quarter material prices, which we pay for.

The next question comes from Chase Coughlan from Van Lanschot Kempen.

Yes, I just wanted to check one thing with you regarding your second half expectations, particularly in terms of volumes. I mean, as you said in April, there's probably going to be a bit of a prebuying effect. I assume that will also continue ahead of June -- the June price increases. And then we're now in Europe, we're seeing these prospects of rate hikes. I'm just curious on, do you expect, I guess, a larger destocking effect in the second half of the year? Or could you give some color around your thoughts there?

Sorry, I can't because we don't give any outlook for our sales development with the full -- for the full year with Q1 figures only with H1 figures. So I can't give an answer about the volumes in the second half of the year.

[Operator Instructions] We have a follow-up question from Cedar Ekblom from Morgan Stanley.

I just wanted to follow up on your comment regarding growth of new products, just to check that my thinking is correct. So if I heard correctly, you said that about 20% of your products are new product introductions and that those grow at more than 20%. Very simple math, that implies a 4% contribution to growth at a group level, which would clearly imply that the growth of the remaining product offering is negative. I don't think that, that's necessarily consistent with some of the other comments that you've made. And so I just want to check that I'm understanding your commentary around new products and their growth rates correctly.

So what I said is that if you look at growth contribution and you divide the growth contribution into new products and old products, that the growth contribution from new products is more than 20%, but it's less than 100%. So in other words, the old products, so to say, are also growing. But new products disproportionately growing.

Okay. So 20% of your product range is new products and those account for more than 20% of the growth, so growing faster than the average, than all the rest of our product offering, but you're not going to put a number around what that actual growth rate is. So it could be a 25% contribution, it could be a 50% contribution. We just don't know what that number is.

Because I don't look into the number every quarter. That's the main reason. We look at that on a yearly basis basically.

And maybe could you give us the number for '25, if you're not looking at it sort of quarterly? Could you help us understand what the '25 contribution was to growth?

It was a significant double-digit number. I don't share the number, but it was a significant double-digit number.

Our last question is a follow-up from John Revill from Reuters.

I'm a little bit confused just about the price increase situation. So you did a normal price increase of around 1%, which came in about April. And then you've done about 5% increase for your copper-related products. That's -- and then what's happening in June? Is that a 2% rise on top of -- across the board, everything on top of that? Or what's the sort of level for the June price increase? Can you just talk us through the breakdown of how that all works again? So I'm a bit confused there.

So you're right with the first two, a regular price increase of around 1% as of April, which turned out to be a bit higher due to mix effects. Secondly, a 5% price increase only on copper. This does not have a material impact or a large impact on group because copper is relatively small. And we do a selective extraordinary price increase as of June, selective for certain products only, which are plastics and energy driven. But the effect of this second extraordinary price increase as of June on a group level to give you an indication of what the effect is on top line is 2% on group sales.

Right. So it's only certain products are getting price increases in June, and that's related to plastics and energy driven, but that will have around 2% group -- it's about 2% effect on group sales and overall fantastic.

Exactly. At the most -- and if you add all together, we expect for the full financial year 2026, a price effect of 2% to 2.5%.

2% to 2.5% for the year as a whole.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christian Buhl for any closing remarks.

Thank you for your participation and your questions. We all wish you a great day. Thank you.