Business and financial review
Positive development in the construction sector in many markets and regions
Despite difficult economic and political conditions, the construction sector proved to be quite robust in markets relevant to Geberit during the year under review.
Euroconstruct estimates in November 2011 show that the development of construction volumes in Europe was flat for 2011 as a whole. Renovation business, from which Geberit earns approximately two-thirds of its sales, recovered over the previous year; new construction, on the other hand, was again down slightly. New construction volume is today about 25% below the record levels achieved prior to the crisis, while the considerably more crisis-resistant renovation segment again reached the same level as in 2007. The development of European construction markets varied greatly, with noticeable dips in the United Kingdom/Ireland, Italy and the Iberian Peninsula as well as respectable growth rates in the Nordic and Benelux Countries, Switzerland, Austria and France. Building construction in Germany, Geberit's largest market, increased by 3.6%. Of the total 2011 European construction volume of EUR 1,303 billion, 77% was in building construction, which is Geberit’s target market. Of this figure, residential construction made up 45% and non-residential construction accounted for 32%. Against the background of these industry figures, Geberit expects to have again significantly outperformed some of the competition in the year under review.
The gross domestic product (GDP) in the US increased by 1.7%, reflecting slower economic growth than in 2010 (+3.0%). Investments in building construction declined by 3.3% compared to the previous year; no significant recovery – and therefore no return to the long-term average – took place. The number of permits for new, private dwellings increased by only 1.2% in the year under review, while permits for single-family houses dropped off by 7.5%. The number of private dwellings completed was 10.7% lower than in the prior year. In non-residential construction, it was primarily the office, hotel, school/university, production building and public safety areas that declined in relation to the prior year, whereas commercial construction (businesses/restaurants/warehouses) increased. The volume of investment in the area of health care/hospitals remained nearly unchanged.
The Far East/Pacific region was again the growth engine of the global economy in 2011. The gross domestic product in Asia (including India) grew by approximately 7%. Nevertheless, preliminary signs of a slow-down were noticeable toward the end of 2011. Growth in the construction industry continued at a strong pace (approx. +6%); China and India again posted the highest growth. In China, state economic-stimulus packages continued to spur construction activity, particularly in the areas of infrastructure and commercial building, but residential construction also benefited from government investments in communal buildings. The rapid increase in prices – mainly in the upscale housing market – could, however, indicate a potential risk of overheating, which has thus far been held off only in part by countermeasures introduced by the government (restrictions on foreign investors, capital guidelines for the purchase of second homes).
- Source:72nd Euroconstruct Conference, Paris, November 2011; Geberit