Building valves: Growth against the trend
German construction industry remains on course - US sales market scores with strong demand - Long-term expectations remain subdued
Despite the weakening international economy, German building valves manufacturers were able to achieve pleasing sales growth of 4 percent in the first half of 2019.
"After the lean previous years with growth rates of only 1 percent, this is a ray of hope on the horizon. In contrast to the previous year, domestic business developed significantly better than exports thanks to the booming construction industry," comments Wolfgang Burchard, Managing Director of the German Valve Manufacturers Association.
In Germany, sales grew by 6 percent in the first half of the year. Abroad, only a plus of 3 percent was achieved. However, this trend could reverse in the second half of the year. Incoming orders in Germany were only up 3 percent, while orders from abroad were up 8 percent. Orders from the euro zone in particular rose by 18 percent.
Technical building valves continue to lead the way
Sales in the individual product groups developed quite differently in the first six months. Manufacturers of technical building valves were able to continue the successful sales trend of previous years and increased their sales in Germany and abroad by 8 percent.
Sales of heating valves in Germany developed pleasingly better than in the previous year, with an increase of 11 percent. However, as foreign sales stagnated here, the division only grew by 7 percent overall.
Due to weak foreign business (plus 1 percent), the sanitary valves industry recorded an increase in sales of only 2 percent. However, domestic sales rose by 5 per cent.
France, USA and China most important sales markets
In the first six months of 2019, exports of German building valves increased by 7.6 percent to a total of 1.7 billion euros. As in the previous year, France led the list of the top 10 sales countries. Deliveries to neighbouring countries climbed by 7.1 percent to 167.6 million euros. French residential construction should lose some of its momentum in 2019 after strong previous years, but is currently still benefiting from brisk renovation business, which is supported by government subsidies for energy-related renovations.
The USA once again took second place among the most important export markets and improved by a rapid 33.5 percent compared with the previous year. Deliveries of German building valves reached a value of 156.1 million euros in the first half of the year. The American construction industry is still in a boom phase. For the time being, consumers remain willing to spend and invest in high-quality houses. Overall, however, a slight slowdown in line with the general economic development in the United States is expected in 2019 and 2020.
China followed the USA in third place. After a weak previous year, exports fell again in the first six months by 7.3 percent to 117.9 million euros. As a result of the current trade disputes between the USA and China, there is a clear sense of uncertainty and reluctance to make major investments in the market. Following the strong performance of the previous years, the construction industry is expected to lose some of its momentum in 2019.
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European neighboring markets remain interesting
Exports to numerous neighbouring European countries are currently on an expansion course. Similar to Germany, the construction industry in the Netherlands and Belgium, for example, is recording solid growth. In addition to residential construction, the construction of high-quality hotels is also booming in Poland.
Forecast 2019 - Prospects clouded
Against the backdrop of the looming economic downturn, there are also increasing signs that the construction boom in Germany is coming to an end. The situation in Europe is similar. In its current forecast, Euroconstruct assumes that the growth curve will flatten further. While the European construction industry was still able to achieve growth of 3.1 percent last year, growth is expected to level off to 1.4 percent by 2021.
To some extent there are opposing trends on the market. For example, growing consumer uncertainty is slowing consumer spending. At the same time, however, low unemployment and high disposable incomes are having a positive effect on demand for housing. In addition, the still good economic situation in large parts of Europe, combined with low credit interest rates and a lack of affordable housing, continues to create demand. In Germany, the shortage of skilled workers and high capacity utilisation in the skilled trades continue to slow down the construction industry.
"In view of the slowing momentum in the construction industry worldwide, we still expect sales growth of 3 percent for 2019 as a whole," predicts Wolfgang Burchard.