Bathroom September 2009

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Georgina Elliott
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International Market Strategy Topics Bulgaria BAUMAX to Open First Hypermarket in Sofia Czech Republic RAVAK's Sales Fall by 5% in 2008 Egypt LECICO Q2 Profit Dips Europe DAMIXA Sold Europe DURAVIT

1 International Market Strategy Topics Bulgaria BAUMAX to Open First Hypermarket in Sofia Czech Republic RAVAK's Sales Fall by 5% in 2008 Egypt LECICO Q2 Profit Dips Europe DAMIXA Sold Europe DURAVIT Announces Increase in Sales for 2008 Europe OBI Set the Pace France MR BRICOLAGE's Profit Increased Germany Sales Boost for HAGEBAU Russia Chain CHESHSKY DVOR Opened Tenth Store in St. Petersburg Ukraine CERSANIT Postpones Launch Of Tile Plant Monthly Special Europe & Canada The European Bathroom Reports Published International strategic market research and consultancy on building product and related markets

2 Bulgaria: BAUMAX to Open First Hypermarket in Sofia Austrian DIY chain BAUMAX plans to open its first hypermarket in Sofia in Bulgaria. The company already operates stores in Burgas, Plovdiv and Stara Zagora. The Austrian chain entered the Bulgarian market in 2008 and competes mostly with PRAKTIKER of Germany and DOVERIE BRICO, a local franchise of Mr. BRICOLAGE of France, which plans to build two new hypermarkets in Sofia in the next two years. Source: Esmek Czech Republic: RAVAK's Sales Fall by 5% in 2008 RAVAK, the largest producer of bathroom equipment in Central and Eastern Europe, generated sales of million (CZK 2.5 billion) last year, a drop of 5% compared with 2007, which was the most successful year in the company's history. RAVAK's business activities in Europe were negatively influenced by the crisis in Spain and the UK where the company reduced its direct business activities and is selling its products through local importers. RAVAK produces bathtubs, shower enclosures, washbasins and other bathroom equipments. It operates in more than 50 countries around the world. Source: CTK Business News Wire 2

3 Egypt: LECICO Q2 Profit Dips Egyptian ceramics company LECICO posted a 20% fall in second-quarter net profit to LE 30.3 million ( 3.86 million). LECICO had net sales of LE 273 million ( 34.8 million) in the quarter, compared to LE 287 million ( 36.6 million) in the same period a year earlier. LECICO produces tiles, sinks and other bathroom items made at two factories in Egypt and one each in Lebanon and France. The firm said the 5% fall was driven by lower than average selling prices for its sanitary wares division due to deprecating European currencies, but was partially offset by growth in tile revenues. LECICO exports more than half its sanitary wares ( toilets, basins, urinals and sinks) with a significant presence in Britain, Ireland and France. The firm expects full-year sales to be lower as a result of 'fragile and volatile' demand in Europe. The company said it would seek to offset this by growing market share in existing markets with new products and by acquiring new customers. LECICO is also expanding its operations to Germany, Algeria and Saudi Arabia. The firm's EBIT margin was 18.5% in the second quarter, compared with 16.2 % a year earlier, though its net profit margin slipped to 11.1% from 13% in the second quarter of Source: Daily News Egypt 3

4 Europe: DAMIXA Sold Having been part of the international MASCO CORPORATION for 33 years, DAMIXA is now back in Danish hands. The company has been known for its elegantly designed taps and mixer taps since 1967, and currently DAMIXA sells its products in more than 25 countries. The company, which is currently going through a major turn-around, is severely hit by declining sales. Managing director of DAMIXA, Kim Kenlev, and chief financial officer, Morten Vedel Kruse, has therefore chosen together with the investment company EVO Capital to buy the company from MASCO CORPORATION. 'DAMIXA is hit hard by the economic decline since our production facilities are only profitable at a much higher turn-over. Therefore, we are currently exploring the possibility of changing and optimising our production. DAMIXA is a strong brand and has many highly skilled employees, and therefore we informed MASCO early on that we were interested in taking over the company'. The take over is effective from 31 th July Source: 4

5 Europe: DURAVIT Announces Increase in Sales for 2008 In 2008, despite global economic developments in the second half of the year, bathroom manufacturer DURAVIT continued upon its growth course and ended the year with an increase in sales of 7.6%. This was mainly due to an outstanding first half of the year that, before the crash, resulted in clear double-digit growth. In 2008, total sales to third parties thus increased to 335 million. Key markets were Central Europe, particularly Germany, Italy, Spain, the United Kingdom and France, as well as the USA, the Middle East and selected Asian countries. The majority of sales were in the Euro zone; within the DURAVIT GROUP, the international share of turnover totalled 77.8%. On the international markets, both within and outside the EU, sales in the group as a whole continued to grow in the single to double digit range. Products that were introduced into the market in the last four years generated the greatest proportion of the sales increase. In Germany, DURAVIT AG also defied the market trend by increasing sales. Achieving growth of 2.5%, it is one of the industry s success storie in 2008 In all, DURAVIT operates with 25 subsidiaries and is present in more than 80 countries. Production takes place at several national and international locations: Hornberg, Schenkenzell, Meißen (Germany), Bischwiller (France), Cairo (Egypt), Istanbul (Turkey), Chongqing (China) and Bizerte (Tunisia). The DURAVIT GROUP had an annual average of 5,436 employees world-wide. As part of the international brand development strategy, in 2008, showrooms moved to the top of the agenda: DURAVIT invested in the USA and opened its first showroom on Madison Square Avenue in New York. At the beginning of May 2009, the company took over 51% of the Tunisian ceramic manufacturer 'MANUFACTURE TUNISIENNE DES CERAMIQUES' (MTC), which has a production site to the Northwest of Tunis. Source: 5

6 Europe: OBI Set the Pace In the rump 2008 fiscal year (1 st May to 31 st December), OBI was able to increase sales by 5.3% over the same period in the previous year to 4.18 billion. The company is now represented in twelve other countries of Europe, as well as Germany itself. OBI has a total of 525 branches throughout Europe and employs a workforce of 38,507 altogether, having opened new stores in Czech Republic, Hungary and Russia, in addition to entering the markets of Ukraine, Croatia and Romania. Source: France: MR BRICOLAGE's Profit Increased MR. BRICOLAGE, a French DIY retail group, achieved gross sales of million in the first half of 2009, which amounts to an increase of 0.3% on the same period last year. Whereas the MR. BRICOLATE sales channel was able to increase sales by 0.7% to million, CATENA store sales went down by 6.1% to 57.3 million. The 50 foreign outlets in nine countries increased their gross sales by 6.6% to 92.4 million (-4.6% like-for-like). At the end of June 2009, the group had 423 MR. BRICOLAGE and 104 CATENA stores in operation, with a combined retail area of 1.3 million m², following seven new openings and five store extensions. Source: Germany: Sales Boost for HAGEBAU In the first six months of 2009 the HAGEBAU GROUP managed to slightly exceed the previous year s sales level. Group revenue rose 0.2% to billion, and centrally invoiced sales in Germany (including affiliated companies) saw an improvement of 0.7% to billion. Centrally invoiced sales in the specialist trade dropped by 3.0% in the period from January to June 2009 compared with the previous year. The builders merchant trade showed a deficit of 3.1%. In the DIY division, however, the sales revenue of the HAGEBAUMARKET channel increased by 3.8% to a new record level. Source: 6

7 Russia: Chain CHESHSKY DVOR Opened Tenth Store in St. Petersburg On 1 st August 2009, the store chain CHESHSKY DVOR, specialising in sanitary ware and kitchen furniture sales, opened its tenth store in St. Petersburg. The store (with an area of 504 m 2 ) operates in the street retail format. The range of the store includes sanitary ware and bathroom furniture. A studio of Czech kitchen furniture opened at the store. The chain operates in the middle price segment. According to representatives of CHESHSKY DVOR, the company finances its projects only from own funds. Source: Retailer.ru Ukraine: CERSANIT Postpones Launch Of Tile Plant Poland's CERSANIT S.A., the country's largest tile producer, has postponed the launch of the second stage of its 40 million tile and bathroom fittings plant in Chyzhovka, Zhytomyr region, tentatively until Q1, 2010, while earlier the company planned to expand the plant's capacities in The company decleared, that the decision is linked with a fall in demand for tile and bathroom fittings due to the recession. The source said that the second stage would be launched if by Q the fall in demand for tiles reverses. Demand is falling due to the crisis. CERSANIT expects that after the crisis demand will return to the old level and start growing. In Autumn 2008, the company launched the first stage of the plant with a capacity of one million bathroom fittings and seven million m 2 of tile per year. After the launch of the second stag, its capacity would expand to two million bathroom fittings and 12 million m 2 tiles per year. The European Bank for Reconstruction and Development (EBRD) has backed CERSANIT's expansion in Ukraine with a loan of 81 million. Total investment in the construction of the two stages is estimated at 120 million. CERSANIT also announced that the company adjusted its investment policy for 2009 and put the construction of plants in Russia and Romania on hold. Source: 7

8 Monthly Special: The European Bathroom Reports Published In August 2009, BRG CONSULT published full country reports on Bathroom Products in 30 European countries. European market studies analyse the 2008 market and are available for the following: - 16 West European countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK; - 14 East European countries: Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia, Turkey and Ukraine. The reports can be purchased in different packages (30 European countries; 16 West European countries, 14 East European countries) or per individual country. The product sections covered in the reports are as follows: - baths - shower trays - ceramic sanitary ware and alternatives - taps and mixers - shower enclosures, conventional shower cubicles and bath screens - hydromassage baths, hydrotherapy cubicles, combined products and shower panels. For more detailed information on BRG CONSULT's heating studies, please contact Mr. David Harrop (dharrop@brgconsult.com) or alternatively call +44 (0) Source: BRG CONSULT 8

Bathroom July Topics

Bathroom July Topics International Market Strategy Topics Bulgaria Bulgaria Germany Germany India Romania Serbia Slovakia Slovenia United Kingdom IDEAL STANDARD Cutting Further Jobs Ceramic Production To Be Cut HANSGROHE Sets