Bathroom June 2007

Bathroom Newsletter
June 07
International Market Strategy
Topics
China
Czech Republic
France
Germany
Germany
India
India
Poland
Poland
Romania
Sweden
UK
China Ranks First in Building Ceramics and Sanitary Ware Production
Ceramics Producer LAUFEN CZ Sees Sales up 1.5% in 2006
VITRA - Great Ambitions Little by Little
GROHE 2007
HANSGROHE AG Posts Record Growth in 2006
KOHLER to Set Up Rs 900 cr Plant in Gujarat and to Open 70 Stores
ROCA to Invest 100 Million Euros in India
GRUPA SBS Celebrates its 5th Anniversary
Koło’s Capacity Doubled
MONDIAL 2006 Profit at 4.5 Million Euro
SVEDBERGS Financial Statement Q1 2007
GEBERIT Sells UK PVC Piping Business to POLYPIPE for £42.5 million
Monthly Special
Poland
The Polish Bathroom Products Market
International strategic market research and consultancy on building product and related markets
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Bathroom June 2007
China: China Ranks First in Building Ceramics and Sanitary Ware
Production
China has become the world's largest production base of building ceramics and sanitary ware after
twenty years of fast growth, said Miao Bin, secretary general of China Building Ceramics and Sanitary
Ware Association.
The secretary general said China has produced more than half of the world's total building ceramics
and sanitary ware with advanced technologies. Some of these products have entered the European
and the U.S. market, he added. In the meantime, he acknowledged that China lags behind its foreign
counterparts in research and development innovation.
Overseas investors are positive about China's building materials industry and are entering the market
through mergers and acquisitions of domestic companies, commission sources said.
The international trade in building materials is also booming, with markets in the Middle East and
Africa the most promising. China's accelerating urbanisation and construction in rural areas meant a
strong demand, the NDRC source said.
In 2006, major building materials companies registered an industrial output value of 1.32 trillion yuan
(175 billion U.S. dollars), up 29.1 percent from 2005. Profits surged 47.1 per cent year-on-year to
60.3 billion yuan. Exports saw a growth of 32.6 per cent to 12.93 billion U.S. dollars.
Source: Xinhua News Agency
Czech Republic: Ceramics Producer LAUFEN CZ Sees Sales up
1.5% in 2006
Ceramics producer LAUFEN CZ generated sales worth Kc 2.058billion in 2006, up 1.5% year-onyear, and grossed Kc 320.7million, CEO Petra Fischerova said at a news conference recently. The
company sells bathroom equipment under the ROCA, LAUFEN and JIKA (Jihoceska Keramika)
trademarks. JIKA contributed 63% to the sales, LAUFEN 27% and Roca 10%. "Interest in domestic
products has been rising after a temporary fall in the mid-1990s," said marketing manager David
Penc. Last year's investments totalled Kc 158.8 million, said Fischerova adding that this year the firm
plans investments worth Kc 340million, mainly in extending its existing plants, and modernising
technology. Swiss company LAUFEN has been operating in the Czech Republic since 1991 when it
privatised ceramics factories in Bechyne, southern Bohemia, and Znojmo, southern Moravia. It
employs some 800 people in the country. In 1999, LAUFEN was taken over by the Spanish company
ROCA.
Source: CZECH NEWS AGENCY
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France: VITRA - Great Ambitions Little by Little
The Turkish bathrooms specialist has re-affirmed its ambitions for France where it is aiming at a 10%
share of the market. "We are not rushing into it," explains Zeki Safak Ozan, Managing Director of
VITRA CENTRE EUROPE, "but going at it methodically." The chosen strategy of the Turkish
manufacturer is to operate through the professional distribution network and so VITRA aims to
establish a presence in a hundred showrooms. After the one in Orleans, the next showroom is to be
opened at the beginning of June at Lambert Carrelage in Grenoble. VITRA has also announced its
intentions to employ a sales force dedicated to the contract market as from 2008.
Source: Négoce
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Germany: GROHE 2007
In the first quarter of 2007, GROHE’s turnover of €254 million represented a 13% increase over the
same period the previous year (€225 million). In Europe GROHE increased turnover by an
impressive 20%. Indeed there was two-digit growth in all product categories. As of the end of May
2007 the two-digit growth in revenue was continuing.
Raw-material costs stay high
The costs of copper and zinc, the component parts of brass, continue to rise. In September 2004, the
world market price for a kilo of brass was €1.70. By May 2007, this had risen to €5.30. The
application, from July 2006 onwards, of a raw material supplement allowed GROHE to pass on
approximately 40% of these additional costs to the customer. Even so the high raw material costs
affected the 2006 profit by around €50 million. The company increased its prices by an average of 8%
in January 2007.
GROHE invests in its German production sites
The company invested some €50 million in the course of 2006, €26 million of which was accounted
for by depreciable items. A sum of €25 million has been invested in R&D and product innovations. A
major investment programme has been underway since spring of this year, involving the company’s
sites at Hemer, Lahr and Porta Westfalica (all in Germany). A total of some €25 million is to be
invested in 2008 in optimising processes at the company’s German production sites.
Significant drop in worldwide plant costs
In the course of restructuring from mid-2005 to the end of 2006, production capacity – and quality –
virtually doubled in GROHE’s overseas plants in Thailand, Portugal and Canada. A clear drop in
production costs was already apparent by the end of 2006.
Productivity at the company’s German sites: GROHE takes advantage of location
GROHE’s investments, which are set to grow by 30% in the years up to 2010, are designed to
increase productivity, while optimising material flows and working processes at the company’s
German sites. A tap assembly that currently takes around two weeks to leave the production plant
will eventually do so in just four days. This concept, which has been developed by the company’s
German workforce, leads to better defined production processes, considerably shorter manufacturing
times and smaller inventories. This brings to the fore the geographical advantage of Germany as a
source of know-how and innovation based performance.
Management moves to Düsseldorf
As part of its effort to attract even more international management talent, GROHE has decided to
move its corporate headquarters to the German city of Düsseldorf by January 2008. The new headoffice team is to consist of some 50 people. The company is currently looking at various sites in this
city on the banks of the Rhine.
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About GROHE
GROHE is Europe’s largest brand for sanitary and bathroom fittings, and with an 8% market share is
a leading global brand. As a global brand for sanitary products and systems, GROHE sets the
standards for quality, function and design. The company, which is headquartered in Hemer,
employed on average around 5200 people in 2006 throughout the world, 3,200 of which were in
Germany. In 2006 GROHE recorded revenue totalling €939 million for bathroom and kitchen fittings,
automatic fittings for commercial and public use as well as installation and washing systems. GROHE
has six production plants; three of these are in other countries: Portugal, Thailand and Canada. The
company records 82% of its sales outside Germany.
In the financial year 2006 revenue increased by over 12% to €939.2 million (2005: €838 million*) and
operating profit (EBITDA) by over 11% to €171.2 million (2005: €154 million*).
Source: www.grohe.com
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Germany: HANSGROHE AG Posts Record Growth in 2006
The Board of Management of HANSGROHE AG summed up the past financial year as extremely
successful at its annual press conference. "2006 was the best year ever in the company's nearly 106year history", Siegfried Gänßlen, the Deputy Chairman of the Board and CFO declared. "The
HANSGROHE Group managed to set new records: total sales soared by nearly € 100 million, the size
of the workforce broke the 3,000 mark for the first time, rising to 3,094 employees, and earnings and
sales saw a disproportionately sharp rise." Net sales by this specialist manufacturer of showers,
faucets and accessories climbed to a total of € 569.2 million in 2006 from € 476.2 million in 2005 - a
gain of 20 per cent. Growth in sales and continuous, broad-based efforts to enhance efficiency
contributed to a further improvement in earnings, with earnings before interest, taxes and depreciation
leaping by 28 per cent to € 109.6 million from € 85.7 million in 2005. This enabled the company to
expand its EBITDA margin to 19.3 per cent in spite of soaring raw material prices and a still strong
euro. Operating earnings (EBIT) of € 92.0 million in 2006 were also well above the previous year's
level of € 69.2 million. "In 2006 we benefited from our improved competitiveness, which was aided by
our innovative strength, a continued emphasis on optimising our corporate processes and efforts to
exploit international markets selectively. This was a key prerequisite for converting the additional
boost coming from good overall growth and the ongoing boom in emerging markets in Eastern Europe
and in the Near and Far East into above-average growth in earnings and increased market shares."
Double-digit growth on a global scale
In fact, the family-run business was able to record double-digit growth rates in all market regions and
strengthen its market position accordingly. Head of German operations, Otto Schinle, described as
especially satisfying the company's growth in its domestic market in 2006. "With a growth rate of 16
per cent, German sales are again at the levels we were achieving towards the end of the 1990s when
the domestic construction industry was at its peak."
Foreign business expanded at an even brisker rate than business on the domestic market. On a
slightly higher export share of just over 76 per cent, Hansgrohe Group sales grew by 21 per cent
abroad, with the boom regions of Asia and Eastern Europe having an especially strong impact on
growth.
Investment drive to create competence centres
In response to the buoyant trend in business and continuing firm demand, the management of
HANSGROHE AG has announced an expansion in production. A total of € 25 million is to be spent
on the construction of new production facilities through 2009. "In this regard, we also intend
realigning our production strategy," said Board Member Richard Grohe, "and will concentrate on
creating centres of competence within our production system, with Germany continuing to play a key
role in the process". In this connection, additional jobs are also to be created in Germany. As early
as last year, the Schiltach company increased the number of jobs at its domestic operations by 147,
raising the total number of persons employed in Germany to 1,952 by December 31, 2006, a rise of 8
per cent over the previous year's level. Globally, the number of its employees climbed to 3,094 at
year-end 2006 (December 31, 2005: 2,799), reaching a new record in the process.
Double-figure growth targeted in 2007
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Following on its very successful fiscal 2006, HANSGROHE AG sees itself well positioned to remain
on a growth track in 2007. “Even though we did not meet all our objectives last year, we certainly did
lay the foundations to enable us to master the challenges of the current year", said Siegfried Gänßlen,
"especially those posed in terms of costs due to surging prices for basic and raw materials. Our aim is
to attain double-figure growth in 2007 as well, and thus consolidate the HANSGROHE Group's
position as one of the most successful companies in the international sanitary field."
Source: www.hansgrohe.com
India: KOHLER to Set Up Rs 900 cr Plant in Gujarat and to Open 70
Stores
US-based designer kitchen and bath products manufacturer KOHLER is expanding its presence in
India by setting up a production facility in Gujarat at an investment of around Rs 900 crore.
"We are setting up a production plant in Baroda, Gujarat, with an investment of $ 200 million (around
Rs 900 crore), which is expected to be operational in 18 months," KOHLER India Vice President and
Commercial Director Sharad Mathur said.
He said the plant, one of the biggest in Asia, will help the company cut costs and become a big player
in the Indian market.
"We are aiming to be the market leader in the next seven years," Mathur said.
The company would also open 70 stores by December this year in cities like Mumbai, Hyderabad,
Bangalore and some smaller ones.
Currently, the firm has 41 franchisee stores across the country, four of which are in the NCR region.
It opened a new store in Gurgaon recently.
KOHLER, one of the oldest family-owned companies in the US, entered India in May 2006 targeting
the middle and higher segments. The products are currently designed in the US and Europe and
some designs are customised to suit the Indian requirements.
"India is a great market which provides a lot of opportunity to sell and eventually we also plan to get
our products designed in India," KOHLER Co Senior Vice President Human Resources Laura E
Kohler said.
The product line offered by the company in the bathroom segment includes toilets, lavatories, faucets,
bathtubs, whirlpools, showers and others with international designs and trends.
Source: Indian News
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India: ROCA to Invest 100 Million Euros in India
Spain's PARRYWARE ROCA, a global leader in sanitary ware, recently announced plans to invest
100 million euros in India in the next two years for scaling up operations.
"The company plans to invest this money on three fronts - advertising, scaling up plant capabilities
and acquisitions," Emilio Salazar, Deputy Managing Director of PARRYWARE ROCA Pvt Ltd, a joint
venture between ROCA and India's EID Parry said.
"We are currently scaling up the operations and capabilities of the plants owned by our joint venture
partner, EDI Parry. We are also looking at acquisitions in the sanitary ware and tap segments," he
told reporters at the launch of the joint venture's first showroom in the city.
The 50:50 joint venture was formed in April 2006 and the brand was formally launched in India in
March 2007.
"As per the JV agreement, there would be a progressive implementation of the technology developed
by ROCA at the production centres of PARRYWARE ROCA as well as at the new factory in
Perundari, Tamil Nadu," he said.
PARRYWARE, currently has four manufacturing units. The facilities are being enhanced with a view
to commence production shortly, he said.
"We hope to start production of the ROCA products by the end of this year," Salazar said, adding the
products manufactured in India would be of the same standard and quality produced globally.
Source: The Press Trust of India Ltd.
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Poland: GRUPA SBS Celebrates its 5th Anniversary
The company is one of the largest buying groups of sanitary, heating and installation products in the
Polish market. Due to its strong activities in the Polish market, GRUPA SBS with all its members
managed to double its turnover to €245.8 million (960 PLN million) in 2006. At the beginning of 2007
GRUPA SBS increased its sales by further 42%. The company’s market share is estimated to be at
20% in sanitary, installation and heating products market in Poland.
GRUPA SBS is a distributor of the following brands: AFRISO, BSH, DANFOSS, DE DETRICH,
FLAMCO, GEBERIT, GRUNDFOS, HANS GROHE, HERZ, IMI, IMMERGAS, JEREMIAS, JUNKERS
MEIBES, NIBE-BIAWAR, ORAS, OVENTROP, REFLEX, RETTIG HEATING, ROTHENBERGER,
SIME, SOTRALENTZ, VAILLANT, VALSIR and VALVE. The company also offers other brands of
heating, sanitary and installation products.
Since its establishment, GRUPA SBS has been developing strongly due to the consolidation and
activities of its main members. Currently, the company has 200 members throughout the country.
Other important issues:
GRUPA SBS was one of the first buying groups to have launched brands under its own name
and the company now offers the largest range of products in the heating, sanitary and installation
markets. The company offers over 300 products under a ‘private label’ - KELLER and DELFIN
brands.
The company also introduced the most popular loyalty programme ‘Profit-You’ for its members’
clients with a total budget of 1 million PLN.
The company’s main strategy is to offer equal selling and purchasing policies to its members. This is
believed to result in increasing members' profit and consequently growth in the consolidated turnover
of the group. Moreover, the company seeks to further improve the brand recognition, and thus
strengthen its position in the Polish market.
The strategy of GRUPA SBS for 2007-2011:
-
Assurance of the best product quality by GRUPA SBS
Maintain the leading position in the market, supported by new marketing strategy, and further
increase its share in the overall market
To achieve these goals, GRUPA SBS aims to:
1. Increase the company’s capital or enter the stock exchange.
2. Increase the sales of “private label” products to up to 30 % of the SBS turnover over the next 5
years.
3. Increase the number of products offered.
4. Establish its own logistic centre.
5. Apply the same commercial and marketing policies to all members.
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6. Increase market share by over 20% and further strengthen its leading position.
7. Provide office and transportation equipment to its members.
8. Cooperate with similar organisations in Poland.
9. Cooperate with similar European organisations.
If you wish to receive more information about GRUPA SBS, please contact directly Mr Jacek
Kaminski ([email protected]) at +48 42 663 54 00.
Source: GRUPA SBS
Turnover Development (PLN million)
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Poland: Koło’s Capacity Doubled
The extension of SANITEC’s ceramics factory in Koło, Poland, named Koło II was officially opened on
26 April 2007. The expansion, which includes both a logistics centre and production facilities, doubles
the production capacity in Koło from 1 to 2 million pieces. Together with the Włocławek plant,
SANITEC Koło’s overall output in Poland now exceeds 3 million ceramic pieces annually.
"The purpose of building the new plant and expanding the logistics centre was to meet the increasing
domestic and international demand from countries throughout Europe and to improve service for our
Polish customers", said Marek Kukuryka, Senior Vice President, Region Central Eastern Europe and
Managing Director of SANITEC Koło.
The plant in Koło celebrated its 45th anniversary in February 2007. During the past 14 years, under
the ownership of SANITEC, the plant has undergone significant development raising the production
capacity from 300,000 to 2 million pieces. Koło II is equipped with state-of-the-art technology and
employs over 280 persons in production and logistics.
Ceramic sanitary ware, shower cabins and acrylic bathroom products manufactured both in Koło and
in other facilities of SANITEC Koło are stored and distributed from the 12 000 m2 large warehouse.
The Warehouse Management System is based on radio terminals and bar code readers for improved
logistics processes. The Koło Distribution Centre is integrated with the SANITEC Group logistics
system.
Source: www.sanitec.com
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Romania: MONDIAL 2006 Profit at 4.5 Million Euro
Romanian ceramic tiles and sanitary wares producer MONDIAL closed 2006 with a profit of 4.5 million
euro ($6.07 million), the company said on May 11, 2007.
The company's turnover rose 25% to 32.4 million euro ($43.67 million) last year, due to a significant
growth in the local construction sector, as well as expansion of its client portfolio.
MONDIAL held 45% of the local sector market at the end of 2006.
The company plans to invest 1.3 million euro ($1.75 million) in 2007 to optimise production and
finance marketing and promotion projects.
MONDIAL operates a plant in Lugoj, western Romania, where it employs 990.
German pottery, ceramics and porcelain maker VILLEROY & BOCH took over a 51% stake in
MONDIAL in 1996, in a transaction worth 10 million euro ($13.5 million), and later increased its stake
to 99.56%.
VILLEROY & BOCH has invested some 25 million euro ($33.69 million) in the Romanian company
since the acquisition, in an effort to expand MONDIAL's production capacity to 1.25 million units in
2006, from the 300,000 it produced in 1996, as well as to modernise its technology, improve the
quality of its products and boost exports.
Source: Balkans Business Digest
Sweden: SVEDBERGS Financial Statement Q1 2007
During the first quarter of 2007, the company increased its turnover to SEK 136.9 million. The net
profit before tax was SEK 25.6 million. The largest increases occurred in its Swedish and Norwegian
markets. SVEDBERGS is also present in Finland, Russia, Denmark and Great Britain.
The Swedish manufacturer SVEDBERGS in DALSTROP AB is a key player on the Nordic bathroom
markets. The product range covers the entire bathroom from bathroom furniture to ceramic sanitary
ware, baths and shower wall products.
Source: VVS Forum
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UK: GEBERIT Sells UK PVC Piping Business to POLYPIPE for
£42.5 million
GEBERIT said it is selling its entire PVC piping business in the UK to Polypipe for £42.4 million.
The transaction will be effective as of July 1, and covers the entire production and storage facilities at
Aylesford, its sales team, as well as Terrain, a leading brand in the UK commercial PVC drainage
market.
In 2006, the business generated sales of £25 million, GEBERIT said.
Source: AFX UK Focus
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Monthly Special: The Polish Bathroom Products Market
Geography
Poland is the largest Central European country with a land area of 322,577km². The country is
divided into 16 semi-autonomos ‘voivodeships’, 65 towns with province status and 308 provinces.
Each province is further sub-divided into municipalities.
Demographics
The population of Poland totalled almost 38.2 million in 2005, making it the largest country in Central
Europe. Approximately 60% of Poles live in urban areas.
Households
According to the Statistic Office, at the end of December 2004 there were 13.7 million households in
Poland. Out of the total, 9.2 million households were in cities and 4.5 million in rural areas. The
average number of person per dwelling was 3.01.
Key Economic Trends/Drivers
In 2005, the Polish economy saw a slowdown in GDP rates for the first half of the year and recovery
in the second half. The GDP growth in 2005 reached 3.3%. Increases in investment, strong exports,
improvement in construction and industrial output and lower unemployment were the main drivers for
the 2005 year.
Construction Trends
Construction output staged an impressive recovery to rise by 6.5% in 2005. This recovery in
construction started in the final quarter of 2004 and improved further throughout 2005.
Housing Starts/Completions
In 2005, 115,862 permits were issued for the construction of new dwellings in new buildings, 80%
more than in 2004.
The number of housing completions increased by 5.5% in 2005 and reached 114,060 dwellings
completed.
Overall Trends in the Bathroom Products Market
The overall bathroom products market experienced an increase in 2006, as a result of strong new
build and renovation activity.
Sales of baths declined by over 2% in 2006, mainly as a result of significant drops in sales of cast iron
and steel baths. Synthetic baths recorded another year of growth and are projected to sustain stable
growth for the next five years. A similar development has been also seen in the market for shower
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trays with overall sales declining by less than 1%, but with synthetic models experiencing healthy
growth.
The impact of Chinese imports
In 2006, the strong increase in Chinese imports affected mostly the ceramic sanitary ware market, the
shower enclosures market and the hydrotherapy products market. The total market for ceramic
sanitary ware and shower enclosures increased by over 3% in 2006, mainly due to growing sales in
the low-end product segment. The markets for hydrotherapy cubicles and combined products also
saw an increasing number of unbranded products from the Far East. The growth in Chinese imports
had a negative impact on traditional European manufacturers, which have in many cases experienced
falling sales.
The taps and mixers market increased by almost 14%. The increase in overall demand was triggered
by growing housing renovation activity, as well as some restocking by merchants. Two-head mixers
and pillar taps continued to lose share in favour of one-head and thermostatic mixers. Due to the
strong increase in the prices of copper, brass and chromium materials the average price (in local
currency) rose by over 10% in 2006.
If you wish to receive further information on the Polish bathroom products market, please email Miss
Malgorzata Kozyra ([email protected]) or call +44 1227 766 810.
Source: BRG Consult
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