Challenging parameters

2013 saw only an insignificant change in economic and political parameters. As in the previous year, the construction industry in the geographic markets relevant for Geberit saw strongly di­ver­gent developments. Some markets remained robust, others recovered in the second half of the year and several remained caught up in a serious crisis.

Euroconstruct published an updated outlook for construction volumes in Europe in November 2013. These figures once again forecasted a decline in building construction volumes of 2.7% in 2013 (previous year -4.4%). The decline was much more significant for new buildings (-4.5%) compared to renovations (-1.2%). When compared to figures from further in the past, new building projects are over 30% down on 2008 and almost 40% down on the same value in 2007. In contrast, the renovation business is comparatively stable and has been ranging between 5 and 10% below the values from 2007 and 2008 for several years.

In addition to the more stable situation in the building renovation sector mentioned before, Geberit also benefited from the generally positive trend in the building construction sector in countries such as Switzerland (+1.9%) and Germany (+0.3%). Also of note is the largely positive situation in Scandinavia (with the exception of Finland). In comparison with the construction sector as a whole, Geberit also benefited from the fact that, at -4.0% (previous year -8.2%), the civil engineering sector – which is not relevant for the company – trended substantially weaker than the building construction sector. Based on this information, Geberit can assume that it clearly outperformed its competitors once again. For example, the company managed to develop better than the market environment in countries experiencing a decline – thus gaining market shares.

Of the total construction volume in 2013 of EUR 1,285 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 within residential construction.

In the USA, gross domestic product (GDP) rose by 1.9% and the economy grew at a slower rate than in 2012 (+2.8%). In­vest­ments in building construction increased by 8.6% year-on-year, thus continuing the recovery which started the previous year. However, despite positive trends a return to the long-term average is still a long way off. Investments in non-residential construction increased by 0.1% in total (previous year +5.1%). While offices, hotels and commercial buildings increased no­tice­ably (+6.3% in 2013), the trend for the healthcare/hospital and school/university sectors important to Geberit remained un­sat­is­fac­tory (-5.2% in 2013). Residential construction performed substantially better than non-residential construction: The number of building permits for new private residential units increased by 18.0% in the reporting year (previous year +33.0%), while the number of permits for single-family houses rose by 19.0% (previous year +24.0%). The number of finished private residential units increased by 17.0% year-on-year (figures on the US construction industry as per the US Department of Commerce, United States Census Bureau).

In contrast to the global trend of a slowdown in development (from 2.6% to 2.4% according to the International Monetary Fund), economic growth in the Far East/Pacific region in­creased to just under 5%. Around 60% of total global growth was reported in this region in 2013, with China accounting for 60% of this figure. Based on the data of IHS Global Insight, the construction industry in Asia experienced similar growth in 2013 (+4.9%) as in the previous year, whereby the civil engineering sector, which is not relevant for Geberit, grew more strongly than the building construction sector. With almost 50% of regional construction volume and well over half the growth, China remains the dominant country in the construction sector in the Far East/Pacific region.