Integrated Annual Report 2015
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Market environment

Business climate still challenging

As in previous years, the construction industry in 2015 was shaped by developments that varied by region. There was no comprehensive recovery in the industry. Only a handful of markets experienced positive development. Elsewhere, volumes declined significantly: particularly notable was the slump in activities in the construction industries of China and Russia.

In a recent updated assessment for Europe, Euroconstruct adjusted its previous forecasts for the building construction volumes in 2015 down from +1.8% to +1.1%. When compared with older forecasts by Euroconstruct, the more cautious outlook is clear: at the end of 2014, it was assumed that building construction would increase by 2.0% in 2015. As in the previous year, new builds (+0.9%) increased by a smaller percentage than renovations (+1.2%). It is striking that the current volume of new building projects is 30 to 40% down on the level seen in 2007/2008. In contrast, the renovation business has once again almost reached the level seen at that time. Euroconstruct estimates for Germany (+0.7%), Switzerland (+1.0%), Italy (-0.3%), France (-0.9%), United Kingdom (+0.6%) and Austria (+0.3%) – Geberit's six biggest individual markets – were all below the average of the Euroconstruct estimate for building construction in Europe in 2015. Euroconstruct forecasted particularly strong growth for the Netherlands (+7.2%) and Sweden (+8.5%). Against this backdrop, it is safe to assume that Geberit's organic development once again outperformed the relevant competition during the year under review. The development of sales in Switzerland was affected by the currency rebate granted.

In Europe, 77% of the total construction volume in 2015 of EUR 1,371 billion relates to building construction. Residential construction accounted for just under 60% of this, and non-residential construction for just over 40%. More than half of the building construction volume pertained to renovation projects, primarily as a result of the high proportion within residential construction.

In North America, gross domestic product (GDP) rose by 2.4% and the economy grew slightly more than in 2014 (+2.2%). According to figures on the US construction industry published by the U.S. Department of Commerce, United States Census Bureau, investments in building construction increased by 14.8% compared with 2014. Within building construction, investments in non-residential construction increased by 17.0% in total, which was considerably more than in the previous year (+8.8%). Although below-average, the development of the health care/hospitals and schools/universities segments, which are important for Geberit, was nonetheless positive, at +5.9% (-1.4% in the previous year). The recovery in residential construction continued: the number of building permits for new private residential units increased significantly by 12.0% (previous year +5.6%); however, the absolute figures are still around a quarter below the long-term average before the financial crisis.

At +4.7%, economic growth in the Far East/Pacific region slowed marginally compared with the previous year (+4.9%), running counter to the global economic trend (of +2.5% in 2014 to +2.8% in the year under review; figures according to the International Monetary Fund). Nonetheless, at 53% (previous year 61%) more than half of the global growth originated from this region. The lion's share of that growth was achieved in China and, to a lesser extent, India. Despite the relatively stable macroeconomic situation, some of the region’s construction markets suffered a slowdown. In a few regions of China in particular, there has been a significant slump in residential construction. Stocks of unsold residential properties, which had increased further compared with the previous year, had a negative impact on residential new builds.