Bathroom Newsletter April 07 International Market Strategy Topics Belgium New Production Location for SPHINX Bulgaria ROCA to Invest 13.8 Million in a Second Factory China KOHLER Invests USD 260 Million in China India ROCA to Open 20 Showrooms in India during 2008 Netherlands WISA Takes Over WILUX Russia Turkish KALE Group to Build $100 Million Plant in Moscow Region Spain Spanish Ceramic Exports Increased by 7% in 2006 Sweden ACCENT EQUITY Acquires INREDNINGSGLAS SKANDINAVIEN UAE RAK Ceramics Posts Dh137 Million Profit UK AMERICAN STANDARD Companies Completes Sale of VENESTA Monthly Special Netherlands Market Mapping and End User Services The Dutch Bathroom Products Market International strategic market research and consultancy on building product and related markets
Belgium: New Production Location for SPHINX The leading Dutch bathroom products manufacturer KONINKLIJKE SPHINX B.V., part of the SANITEC GROUP, merged its previous two production and strategic locations in Rosmalen and Maastricht and now operates centrally at its new factory in Maastricht, which was officially opened by Queen Beatrix of Holland on March 14th, 2007. The company s previous locations have been closed down and all production is now exclusive to the Maastricht factory. Source: www.installatienet.nl Bulgaria: ROCA to Invest 13.8 Million in a Second Factory CORPORACION EMPRESARIAL ROCA is going to invest 13.8 million in a second factory in Bulgaria. The ceramic sanitary ware plant will start operation in the Balkan country in 2008, and will be located in Kaspichan, the same city where its first production centre is located. The turnover of ROCA BULGARIA in 2006 grew by 30% on the previous year. Reasons for this growth and justifying the construction of the new plant is notably the rise in the construction sector, with more and more hotels and new dwellings being built. ROCA is also planning the opening of a showroom this summer in the Bulgarian capital. ROCA entered the Bulgarian market on acquiring the LAUFEN plant in 1999, and has been growing strongly since then. Last year, ROCA acquired 50% of the Indian group PARRYWARE and the bathroom division of EAGLE BRAND. ROCA has also opened a plant in St Petersburg, and production units in Poland and China. Source: www.cincodias.com 2
China: KOHLER Invests USD 260 Million in China The world's leading sanitary ware manufacturer KOHLER has invested USD 260 million in a sanitary ware project in Zibo, a city in East China's Shandong province. The project was formally named Zibo Kohler Co., Ltd. The project, located in the Zibo Building Ceramic Industry Park in the Zichuang District, is expected to turn the area into a top grade ceramics production base in North China. Ceramic manufacturing has now become a pillar industry of this region. Based on second largest ceramic production capacity throughout the country, the district has become one of China's top three ceramic production bases. The preparatory work has already started and construction work is likely to begin this June. Source: SinoCast India: ROCA to Open 20 Showrooms in India during 2008 PARRYWARE ROCA, a joint venture between the Indian MURUGAPPA and the Spanish group ROCA, is preparing an investment of 130 million within the next two years for acquisitions and expansion plans in India. The company plans to invest 12-15 million a year into marketing and programmes to gradually increase its production capacity. The group is also looking for regional and national brands to add to its catalogue with the aim of giving it better added value. Before the end of the year, up to 20 showrooms will be opened and it is expected that production of ROCA products will start from the beginning of next year on the sites at Alwar and Perundurai. Source: I&M 3
Netherlands: WISA Takes Over WILUX BRG Consult Newsletter As of April 1st, 2007 the Dutch WISA Systems BV has taken over all production of WILUX bathroom products. Previously owned by the WILDSCHUT Invest Group, founded and managed by Mr Ruud Wildschut, the company has temporarily ceased production following the buy-out. WISA Systems BV, as well as WISA BV and WISA GmbH, are plastic cistern and flushing system specialists and form part of the Australian GWA International Ltd. Relocation of the management and logistics of WILUX to the WISA head office in Arnhem, the Netherlands, is currently underway and WILUX s production will commence at the WISA plant again later this year. WISA Systems is said to be keeping the brand name WILUX for the foreseeable future. Source: www.installatienet.nl Russia: Turkish KALE Group to Build $100 Million Plant in Moscow Region The turkish KALE Group plans to build a plant to produce ceramic tiles, construction materials and sanitary ware in the city of Serpukhov in the Moscow Region by September, the company announced. The company plans to invest about $100 million to build the plant. The KALE Group is expected to produce construction materials at the plant under the Kalekim trademark and ceramic tiles under the Kalebodur and Canakkale trademarks. The KALE Group, founded in 1957, includes 24 companies and supplies its products to more than 65 countries. Source: Prime-Tass Spain: Spanish Ceramic Exports Increased by 7% in 2006 Spanish ceramic exports to a total of 181 countries reached 2.1 billion in 2006, up 7% from 2005. Within the EU, sales went up 5.1%. The USA remained the number one export market, with exports up 4.2%, followed by France (+5.4%). Russia becomes the fourth most important country, before Germany and Portugal, with a growth rate of 38.5%. Source: I&M 4
Sweden: ACCENT EQUITY Acquires INREDNINGSGLAS SKANDINAVIEN On the 27 of February 2007, ACCENT EQUITY acquired 2/3 of the stock options of the Swedish shower wall manufacturer INREDNINGSGLAS SKANDINAVIEN AB. The formal handover was completed on March 22. The former owner and vice-president, Alf Larsson, and the management own the remaining stock options. INREDNINGSGLAS has its main office and factory in Malmo, Sweden, with approximately 40 employees. The company's turnover was estimated at SEK 115 million in 2006. The company has had an impressive run in the shower wall market and increased its turnover by more than 40% in 2006. At current estimates, INREDNINGSGLAS is expected to increase its turnover by 30% in 2007 to reach SEK 150 million. The company owns the INR and COMBAC brands. UAE: RAK Ceramics Posts Dh137 Million Profit RAK Ceramics, the Ras Al Khaimah based global ceramic major, has announced a distributable net profit of Dh 137.8 million for the year 2006, up from Dh 128.16 million in 2005. According to the annual report, total sales of the company surged to Dh 1.68 billion in 2006 from Dh 1.29 billion in 2005. The total assets of the company swelled from Dh 2.69 billion to Dh 3.82 billion during the period. According to the report, RAK Ceramics has made considerable investments in new subsidiaries which include a 51 per cent stake in the new firm KLUDI RAK LLC, which is to manufacture water taps and faucets and other sanitary ware accessories, entailing an investment of Dh 6.1 million. Source: Emirates 5
UK: AMERICAN STANDARD Companies Completes Sale of VENESTA AMERICAN STANDARD Companies Inc. and RS BUILDING PRODUCTS Ltd. today announced completion of the sale of AMERICAN STANDARD's VENESTA Washroom Systems business in the UK to RS BUILDING PRODUCTS for approximately $165 million. The sale represents an after-tax gain of about $50 million for AMERICAN STANDARD. With 2006 sales of approximately $62 million, VENESTA is a leading supplier of specialised commercial washroom products in the UK and part of AMERICAN STANDARD's $2.4 billion Bath and Kitchen business. It designs and manufactures a comprehensive range of washroom cubicles, ducting, vanities, lockers, benches and accessories. RS BUILDING PRODUCTS was formed in November 2006 as a management buy-in vehicle to acquire companies in the commercial washrooms sector. Martin Rees, executive chairman, said, "We are delighted with the acquisition of VENESTA, a business with a strong track record in the commercial washrooms market." Earlier this year, AMERICAN STANDARD announced its intention to sell its global Bath and Kitchen business by early autumn as part of a plan to separate AMERICAN STANDARD into three stand alone companies. "We're pleased with the VENESTA sale as part of our overall plan to sell the Bath and Kitchen business," said Fred Poses, chairman and CEO of AMERICAN STANDARD Companies. "VENESTA's products are unique within our Bath and Kitchen business, so we believe this business and its people will have greater growth opportunities as part of RS BUILDING PRODUCTS." VENESTA and the entire Bath and Kitchen business will be reported as discontinued operations in AMERICAN STANDARD's quarterly earnings announcement on April 19. Source: PR Newswire 6
USA: GEBERIT and DURAVIT to Form North American Partnership On Jan. 18, the GEBERIT GROUP announced a North American Partnership with DURAVIT, a leading manufacturer of sanitary ceramics, bath furniture and wellness products. The combined efforts of these two segment leaders are focused on developing the North American concealed installation system and wall-hung toilet market. The partnership will focus on developing the market for concealed installation system technology in the North American single and multi-unit residential and hospitality markets. It will combine GEBERIT's plumbing technology know-how with DURAVIT's design. As partners, a joint training programme and marketing campaign will be launched in the coming months. Also in 2007, three regional training centres in Atlanta, Chicago and New York City will be established to educate architects, designers, engineers, plumbers and showroom sales associates. In addition, GEBERIT North America will establish a competence centre in Chicago where North American specific solutions will be developed and tested. As European market leader in plumbing technology, the GEBERIT GROUP is a global provider in the area of plumbing technology with sales of CHF 2.2 billion (Swiss francs) and 5,300 employees in 40 countries worldwide. Source: BNP Media 7
Monthly Special: Market Mapping and End User Services In 2004 and 2006, BRG Consult completed ground breaking market mapping research projects into the UK market for bathroom products. The aim of these studies was to extend the market data available to clients, and above all to take the research downstream into households that constitute the ultimate customer base of the home improvement segment of the market. A key element of this research was the creation of a database of over 8,300 home improvement projects. Details of these projects were acquired from over 1,400 installer interviews and a consumer panel run by GfK MARKETING SERVICES covering 18,000 UK households. As a result of its work on these market mapping projects, BRG CONSULT has effectively established a panel of over 1,000 individual installers, who can be contacted to discuss all aspects of bathroom installations. BRG CONSULT s in-house telephone interviewing facilities have also allowed the completion of a number of customer satisfaction studies in the markets for building related products. Through its association with GfK, BRG CONSULT can also look at aspects of the consumer market for bathroom products. Recently work has been undertaken to look at the installed park of bathroom products in the UK, in terms of both product types and specific brands and models. For more information on BRG CONSULT s full range of market mapping and end user research services please contact Dan Thirkell on: Tel: +44 (0)1227 766810 Email: dthirkell@brgconsult.com Source: BRG Consult 8
Geography BRG Consult Newsletter Monthly Special: The Dutch Bathroom Products Market The Netherlands has a land area of 41,526 km², 18.4% of which (7,655 km²) are waterways, lakes and inland seas. There are 12 provinces, each subdivided into municipalities, of which there were 443 at the beginning of 2007. Demographics The Dutch population has suffered a declining growth rate since 2000 and only increased by 27,000 in 2006, which equates to an increase of just 0.16% on 2005. The main reason for this is the increasing strictness of the immigration regulations and the growing popularity of emigration. A declining birth rate is also partly responsible for restricting population growth. Households The current number of households has increased by 0.7% since 2005 and is expected to continue increasing at this near negligible rate for the foreseeable future. The average size of the Dutch household has decreased further to just 2.27 people per dwelling and is expected to continue declining in future, due to an increased trend in single households. Key Economic Trends/Drivers Following a period of poor economy, 2006 witnessed the first signs of recovery. The GDP growth index managed to increase to 3.1% compared to the lower 1.5% of the previous year. This is mainly due to the impressive reduction in unemployment, down by 17% from the previous year to just 5.5% of the total population. This is expected to drop further to 4.5% and remain stable at this value. Construction Trends Construction has been increasing for the second year running and has shown a growth rate of 5.5%. This growth in construction output has been observed in all sectors including residential, nonresidential and civil engineering. The construction growth rate is expected to slow down over the next few years but will remain positive into the foreseeable future. Housing Starts/Completions In 2006 the number of approved building permits reached 90,000, up by 8.4% on the previous year. The number of building permits issued per year is expected to remain constant at this value for the short to medium term. The number of housing completions has similarly been growing, increasing by an impressive 12% on the previous year to reach a total of 75,000 dwellings completed. Housing completions too, are expected to have stabilised at this value. 9
Overall Trends in the Bathroom Products Market The overall bathroom products market in the Netherlands has witnessed an increase of 1.6% from 2005 to 2006, with slightly more pronounced changes within the individual market sectors. Hydrotherapy continues to be a growing market, showing an increase in sales volumes of 5%. Within the scope of hydrotherapy products the most impressive growth is displayed by shower panels, which increased by 15% and are expected to continue improving their market presence with a similar growth rate in future. Hydromassage baths have shown increased sales of 6% while both hydrotherapy cubicles and combined products have see drops in sales figures of 6.1% and 12.5% respectively. The most prominent development in the bathroom products market in the Netherlands in 2006 however is the severe decline of 20% in the shower trays market, due to the introduction of an alternative shower base product called EASY DRAIN. This product is a drainage system, which is built directly into a tiled floor and thus eliminates the need for a shower tray while making the shower stylish and easily accessible. The baths market continued its downward trend in favour of the shower, decreasing by another 3% and is expected to maintain this course for the medium to long term. The increased popularity of the shower leads to increasing sales of shower enclosures and conventional shower cubicles, while the market for baths screens will witness further regression on par with the baths market. If you would like to receive more detailed information on the development of the Dutch bathroom market, please e-mail Jennifer Hauschild (jhauschild@brgconsult.com) or call +44 1227 766 810. Source: BRG Consult 10
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