The German Sanitary Industry

Downturn after upswing

Sanitary industry: from 2008, a positive surprise / Strong sales growth / Domestic business stabilizes in crisis / Scepticism for 2009 / Current prognosis: moderate loss / Clear proviso for adjustment / New forsa study: “private retreat” more important / Concerns for jobs in house and building systems

Frankfurt/Bonn – (vds) Major uncertainty in 2009 and strong sales growth in 2008: the situation in the bathroom industry can be summarized by this brief formula, according to the industry’s umbrella association. The Vereinigung Deutsche Sanitaerwirtschaft (VDS) states that for the first time in many years, domestic business is developing better than foreign demand. Foreign orders are adversely affected by the recent results of the global credit and financial crisis. On the other hand, there is a pleasing result from a current forsa study of approximately 62 million Germans from 18 years of age. This study shows that 67 % of the population regards the individual home as a “private retreat” as more important for people in times of crisis. 22 % assume that the importance is unchanged and 6 % believe it is less, as the mid-February 2009 survey shows. The “impressive vote” also increases the opportunities for growing investment in bathrooms by Germany’s citizens, in the opinion of VDS Managing Director Jens J. Wischmann.

As the study indicates, the sanitary business as a whole (industry, wholesale, specialist trade) posted sales of 16.1 billion euros in 2008 on the basis of new ifo figures. In contrast to 2007 (15.3 billion euros), this corresponds to nominal growth of 5.2 %. This means the industry’s results were better than expected, in particular, in view of the “unsatisfactory final quarter”. Wischmann described the over-proportional domestic increase of 5.8 % to 12.7 billion euros as a “further surprise”. In contrast, foreign sales generally achieved by the industry rose by 3 % to 3.4 billion euros. In terms of the overall evaluation of the relatively strong upturn, the “poor results in 2007“ ought not to be overlooked.

For 2009, the signs are substantially more unfavourable. In general, Wischmann referred to the “high degree of uncertainty” that is currently also the basis for all forecasts in the sanitary business and will probably lead to several corrections throughout the year. The current ifo prognosis is also subject to this proviso – sales in the sector in 2009 are set to moderately fall both at home and abroad. Overall, currently a loss of about 3 % to around15.6 billion euros is anticipated. Additionally, the monthly rise in the indicator for the level of economic activity that is signalled for small- and medium-sized businesses is not looking hopeful. While the commercial situation in production sites is still comparatively stable, definite scepticism prevails for expectations over the next six months.

No special position

Wischmann claims similar developments for the house and building system sector, to which the sectors of heating, air-conditioning and ventilation also belong in addition to the sanitary sector. For 2008, VDS Managing Director announced an increase in sales of 6.8 % to 39.1 billion euros (after 36.6 billion euros) here. Unlike the sanitary sector, the pace of domestic and foreign growth was almost identical with an increase of 6.7 % and 7.3 %.

For 2009, there is a notable decline in sales revenue of about 3 % to under 38 billion euros. This is a further indication that the HVAC sector cannot escape the general downwards trend and shows the provisional trend for employees and company figures. In this case, in 2009 the house and building systems sector with over 400,000 employees is threatened with the loss of 10,000 jobs. Additionally, for the first time there are signs of a falling number of companies. If, as forecast, the number falls to about 51,000, this would mean the number of companies again reaching the 2006 level.

 
Caption

Date: March 2009

Surprise result: with a rise in overall sales of 5.2 % at 16.1 billion euros, the sanitary sector performed better in 2008 than expected, according to its umbrella association. For the first time in many years, domestic business developed more favourably than foreign demand. For 2009, the Vereinigung Deutsche Sanitaerwirtschaft (VDS) announced “considerably less favourable signs”. The forecast of moderate decline by about 3 %, as suggested by the ifo Institute, conceals “a high risk of uncertainty”. This is primarily to be seen as fallout from the global credit and financial crisis.

Graphic: Vereinigung Deutsche Sanitärwirtschaft (VDS)
 Picture 3022