Business report > Business and financial review
Strongly diverging construction industry in individual markets
The construction industry will remain challenging in 2013 under pressure of less growth momentum and political and macroeconomic uncertainties. As it was seen in 2012, the different regions/markets and construction sectors will develop very differently. Generally speaking, it is extremely difficult to make a reliable forecast of trends in the global construction industry.
In Europe, volumes in the construction industry are likely to contract overall in the wake of the saving measures introduced in the public sector largely influenced by a lower readiness to provide debt financing. The non-residential construction sector will still not recover, but this will at least partially be compensated by a flat to slightly positive trend for residential construction. The renovation sector can also be expected to develop better than the new building sector. Positive growth is forecast for markets such as Germany, Switzerland, Austria, Norway, Poland and Russia, while Belgium, Denmark and Finland are expected to experience lower growth rates than in the previous year. The construction industry is unlikely to reverse its downward trend in the UK and France, while Portugal, Spain, the Netherlands and Italy will remain deep in negative territory.
North America will see an upswing in the construction of residential units, but public outlays for construction projects will continue to decline.
In Asia, the outlook for the respective local markets is very different. Since Q4 2011, China has been clearly feeling the impact of government measures to prevent the real estate market from overheating. This will continue to dampen residential construction for at least the first half of 2013. In contrast, the Chinese non-residential construction sector remains robust. Generally speaking, many Chinese indicators are currently trending flatter than the long-term growth rates. Prospects for the Indian construction industry are positive and growth rates of 10 to 15% are expected for mid- to top-range residential units. The Australian construction market on the other hand remains stuck at a low level.
In the face of the uncertain political situation in many parts of the Middle East and North Africa, it is difficult to formulate an outlook for this region. The general rule here is to exercise caution. South Africa, however, is expected to see continued growth.
Persistent volatility for raw materials prices
Raw materials prices have been very volatile in the past few years, but in 2012 the market situation stabilized somewhat compared to the previous year. However, it remains difficult to make predictions for 2013. Assuming volatility remains high for individual categories of material, compared with the previous year stable prices are expected for specialty plastics and rising prices for commodity plastics in the first two quarters. Prices for industrial metals are expected to remain at the previous year's level. Longer-term forecasts are not possible in the current situation.
Owing to the challenging environment, 2013 will be a demanding business year for the Geberit Group. The objective, not only in the construction markets that are still healthy but also in those that are shrinking, is to provide a convincing market performance and to continue to gain market shares as in previous years. The focus will fall on the concerted marketing of the new products introduced in recent years, on various organic growth initiatives, on developing new markets and on the very promising shower toilet business. In line with the Geberit culture, these measures will be accompanied by efforts to further optimize our business processes. The management is convinced that the company is very well equipped for its upcoming tasks. With experienced and highly motivated employees, a number of promising products that have been launched in recent years and product ideas for the more distant future, a lean and market-centric organization, an established cooperation based on trust with our market partners in both commerce and trade and – as a result of our industry leadership in terms of financial results in recent years – an extremely solid financial foundation, Geberit can look to the future with confidence.