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ZURICH, May 3 (Reuters) - Shower toilet and plumbing supplies maker Geberit overcame rising raw material prices during its first quarter to report operating profit in line with expectations.
The Swiss company on Thursday reported adjusted operating profit before depreciation and amortisation of 245.4 million Swiss francs ($246.2 million) for the first three months of 2018, just ahead of the 241 million francs expected by analysts in a Reuters poll.
The company, a big buyer of plastics and metals for its piping products, said it expected prices to continue their upward trend.
“Raw material prices are set to continue to rise in the second quarter of 2018, which will lead to figures in the first half of 2018 as a whole exceeding those of the prior-year period,” Geberit said.
The company said sales increased 11.7 percent to 823.1 million francs, helped by the weakening of the Swiss franc versus other currencies this year.
When currency effects were excluded, Geberit’s sales increased by 4.7 percent, the company said, better than market estimates of 3.6 percent improvement.
Geberit’s shares, which have lost 4.2 percent over the last year, were indicated 1.5 percent higher in premarket trading.
Geberit said the improvement reflected a “positive — although still mixed — environment in the construction industry” as well as its own efforts.
The company’s sales performance is seen as a signal for the health of the broader building industry in countries like Germany — its biggest market — where its products are used in new building and renovation projects.
“The situation in the construction markets should be generally favourable in 2018,” Geberit said, adding that it expected demand to remain healthy in Germany although a shortage of installers would remain a headache.
An easing of the market environment is expected in Italy, while a downward trend was “foreseeable” in Britain as a result of the Brexit vote to leave the European Union, it added. Fluctuations in the Swiss franc exchange rate would have virtually no impact on operating margins, the company added, because it usually produces products where it sells them.
$1 = 0.9967 Swiss francs Reporting by John Revill; Editing by Michael Shields