Integrated
Annual Report 2016

Market environment

Improved business climate

As in pre­vi­ous years, the con­struc­tion in­dus­try in 2016 was shaped by de­vel­op­ments that var­ied by re­gion. The mar­ket en­vi­ron­ment was, how­ever, friend­lier than in the pre­vi­ous year.

In No­vem­ber 2016, Eu­ro­con­struct fore­casted an in­crease in build­ing con­struc­tion for Eu­rope in 2016 of +2.9%, which con­firmed the pre­vi­ous re­port of mid-2016. A com­par­i­son with older fore­casts ex­plains the more pos­i­tive out­look: at the be­gin­ning of 2015, Eu­ro­con­struct still ex­pected build­ing con­struc­tion to in­crease by +2.3% in 2016. At +4.5%, new con­struc­tion re­ported stronger growth in 2016 than ren­o­va­tions (+1.6%). Al­though the vol­ume for new build­ings still lagged be­hind the record highs of 2007/2008 in 2016, ren­o­va­tion vol­umes were al­most on a par again with the level seen at that time. At +3.9%, res­i­den­tial con­struc­tion was the growth dri­ver for build­ing con­struc­tion in 2016. The fol­low­ing coun­tries that are im­por­tant to Geberit in terms of sales did well in 2016: the Nether­lands (+6.8%), the Nordic Coun­tries (+6.2%), Bel­gium (+4.0%), Ger­many (+2.5%), Italy (+1.9%), Aus­tria (+1.7%) and Switzer­land (+0.5%).

Con­struc­tion out­put and Geberit net sales in Eu­rope 2012 – 2016

(Index: 2011 = 100)

Of the total Eu­ro­pean con­struc­tion vol­ume of EUR 1,441 bil­lion in 2016, 79% was gen­er­ated by build­ing con­struc­tion. The ratio of res­i­den­tial to non-res­i­den­tial build­ing con­struc­tion re­mained the same at around 60 to 40 per­cent. In spite of stronger growth, new con­struc­tion as a share of total build­ing con­struc­tion once again lagged slightly be­hind the ren­o­va­tion busi­ness in 2016.

Total con­struc­tion out­put Eu­rope 2016

(EUR 1,441 bil­lion)

In the US, gross do­mes­tic prod­uct (GDP) rose by 1.6% and the econ­omy grew con­sid­er­ably slower than in 2015 (+2.6%). In­vest­ments in build­ing con­struc­tion in­creased by 5.9%. Within build­ing con­struc­tion, in­vest­ments in non-res­i­den­tial con­struc­tion in­creased by 8.0% in total, which was less than in the pre­vi­ous year (+13.8%). This de­vel­op­ment was sup­ported by the of­fice, hotel and com­mer­cial build­ings sec­tor. The health care/hos­pi­tals and schools/uni­ver­si­ties seg­ments, which are im­por­tant for Geberit, de­vel­oped with +4.7% slightly below the pre­vi­ous year (+5.0%). Res­i­den­tial con­struc­tion slowed down fur­ther in the re­port­ing year: the num­ber of build­ing per­mits for new pri­vate res­i­den­tial units only in­creased by 0.4% in the re­port­ing year after the pre­vi­ous year’s good per­for­mance of 12.4% (these fig­ures for the US con­struc­tion in­dus­try were pub­lished by the U.S. De­part­ment of Com­merce, United States Cen­sus Bu­reau).

In the Far East/Pa­cific re­gion, eco­nomic growth at +4.7% was on a par with the pre­vi­ous year (+4.6%). At +2.5%, global eco­nomic growth was con­sid­er­ably lower. At 62% (pre­vi­ous year 55%), more than half of the global growth once again orig­i­nated from the Far East/Pa­cific re­gion, where all rel­e­vant economies en­joyed pos­i­tive growth. As in pre­vi­ous years, China con­tributed around two-thirds to the growth of this re­gion. In spite of the com­par­a­tively good macro­eco­nomic sit­u­a­tion, ac­tiv­ity in the Chi­nese res­i­den­tial con­struc­tion sec­tor re­mained low, in par­tic­u­lar in the smaller conur­ba­tions, as the mar­ket is bur­dened by large num­bers of un­sold res­i­den­tial prop­er­ties.