Market environment

Ongoing challenging business climate

As in previous years, the construction industry in 2014 was shaped by major developments that varied by region. The industry remained challenging and only a few markets experienced a positive construction volume growth. Most of the markets deteriorated further.

Euroconstruct published an updated outlook for the development of construction volumes in Europe in November 2014. The figures published therein forecasted a slight increase in building construction volumes of 0.9% in 2014 (previous year -2.3%). This increase was much less significant for new buildings (+0.3%) compared to renovations (+1.4%). When compared to figures from further in the past, new building projects were 30 to 40% down on the level seen in 2007/2008. In contrast, the renovation business has once again almost reached the level seen at that time.

In addition to this upbeat trend in the building renovation sector, Geberit also benefited from the generally positive trend in the building construction sector in some important countries for Geberit. The driving force here was Germany (+2.3%), while the United Kingdom (+6.1%) and Austria (+1.8%) also developed positively. By contrast, Italy (-1.9%) and France (-2.8%) sustained downturns. Based on this information, Geberit can assume that it has clearly outperformed the relevant competition once again. In particular, the company also managed to develop better than the market environment in countries experiencing a decline – thus gaining market shares.

In Europe, 78% of the total construction volume in 2014 of EUR 1,305 billion relates to building construction. Residential construction accounted for just under 60% of this, and non-residential construction for just over 40%. More than half of the building construction volume pertained to renovation projects, primarily as a result of the high proportion within residential construction.

In the USA, gross domestic product (GDP) rose by 2.4% and the economy grew slightly stronger than in 2013 (+2.2%). Investments in building construction increased by 5.4% year-on-year. Investments in non-residential construction increased by 7.1% in total, which was considerably more than in the previous year (+0.7%). This trend was dominated by offices, hotels and commercial buildings (+15.2% in the reporting year). In contrast to this, the trend for the healthcare/hospital and school/university sectors important to Geberit remained unsatisfactory (-1.8% in the reporting year compared to -6.1% in the previous year). After two years with very positive signals, the situation for residential construction deteriorated somewhat in the past year. The number of building permits for new private residential units increased by 4.2% in the reporting year (previous year +19.4%; figures on the US construction industry as per the US Department of Commerce, United States Census Bureau).

In line with the global economic trend (from +2.6% in 2013 to +2.7% in the reporting year according to figures from the International Monetary Fund), economic growth at +4.8% in the Far East/Pacific region remained practically at the previous year’s level (+4.9%). With a share of 55% (previous year 57%), this region was once again the main driver of global growth in 2014, with China accounting for the largest share of this figure at 62%. Despite the relatively stable macroeconomic situation, the region’s construction markets suffered a slowdown. For example, residential construction in key markets such as China and Singapore cooled off as expected due to high stocks of unsold residential properties and falling prices. However, the positive trend seen in infrastructure projects continued.