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Market environment

Challenging parameters

The uncertain economic and political parameters of the past few years continued in 2012. The construction industry in the individual geographic markets relevant to Geberit saw strongly divergent developments in the reporting year. While some markets were still robust, others remained caught up in a serious crisis.

Euroconstruct revised its December 2012 data on construction volumes in Europe for the reporting year downward from earlier estimates. For building construction, the sector that is relevant for Geberit, volumes were corrected by 2.3 percentage points (from -1.5% to -3.8%). This correction highlights the difficulty of making reliable forecasts in the current environment overshadowed by the debt crisis in Europe. New building construction project volumes in the reporting year were down 5.6% from the previous year and around one-third below 2007's record levels. Although renovation projects contracted by only 2.3%, volumes were still around 5% lower than in 2007.

Geberit benefited from the fact that at -7.5%, the civil engineering sector - which is not relevant for the company - trended substantially weaker than the building construction sector (-3.8%). The more stable situation in the building renovation sector mentioned before and positive developments in the building construction sector in countries such as Austria (+1.5%), Germany (+0.9%) and Switzerland (+0.8%) also had a positive effect. Supported by this comparatively favorable situation, Geberit can assume that it clearly outperformed some of its competitors in Europe in the reporting year.

Of the total construction volume for Europe in 2012 of EUR 1,291 billion, 78% relates to building construction. Residential construction accounted for just under 60% of this, and non-residential construction for just over 40%. Within the building construction sector, slightly more than half pertained to renovation projects, primarily as a result of the high proportion of residential construction.

In the US, gross domestic product (GDP) rose by 2.2% and the economy grew slightly stronger than in 2011 (+1.8%). Investments in building construction increased by 10.0% year-on-year, which is a clear reversal of the trend in the previous year (-2.5%). However, a return to the long-term average is still a long way off. Investments in non-residential construction increased by 5.8% in total (previous year -3.3%). While offices, hotels and commercial buildings increased noticeably, the trend for the healthcare/hospital and school/university sectors important to Geberit remained weak. Residential construction performed substantially better than non-residential construction: The number of building permits for new private residential units increased by 30.7% in the reporting year (previous year +3.2%), while the number of permits for single-family houses rose by 22.9% (previous year -6.4%). The number of finished private residential units increased by 11.4% year-on-year (previous year -10.3%).

Although the slowdown in global economic growth was very noticeable in 2012 in the Far East/Pacific region, more than 40% of total global growth was reported in this region. The gross domestic product for Asia (including India) grew by 4 to 5% in real terms in 2012, mainly driven by China and India. Based on the data of IHS Global Insight, the construction industry in this region continued its solid growth in 2012 at around +6%, whereby investments in the civil engineering sector, which are not relevant for Geberit, grew more strongly at +8% than those in the building sector (approximately +4%). This increased focus on infrastructure investments could be observed in almost all Asian markets. Given its size (more than 40% of Asian construction volumes) and growth (+8.5%), China remained the most important driver of growth; in 2012, the infrastructure development aimed at by China caused a particularly big gap between civil engineering (+14%) and building construction (+6%).

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  • Source:74th Euroconstruct Conference, Munich, December 2012; Geberit
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