Worldwide Sanitaryware Sales Show Mixed Results
American Standard's Plumbing Products business reflects this growth trend. The business had a very profitable year in 1999, with a 16% increase in U.S. sales and a 35% gain in Europe.
The company's sales gains in the U.S. reflected the strong construction market. Renovation and remodeling in the U.S., driven by the large retail home center expansion, continued to grow, and new housing starts remained at high levels. The company said that it believes the multi-year trend of sales and market share growth in the U.S. retail market channel will continue, leading to increased sales. However, the gain in the U.S. was partly offset by decreased sales in Latin America, where markets were down significantly. Overall, segment income for the Americas increased 27% for this American sanitaryware manufacturer, driven primarily by strong volume increases in the U.S. and the benefits of lower-cost sourcing from expanded facilities in Mexico.
In Europe, American Standard reported that sales increased modestly in line with market growth. The company's sales gains in Europe included the effect of its acquisition in February 1999 of the Bathrooms Division of Flue Circle Industries PLC, consisting of two principal businesses: Armitage Shanks, a U.K. manufacturer; and Ceramica Dolomite, an Italian manufacturer. Far East sales and segment income both declined slightly as operations continued to suffer from adverse economic conditions in the region, the company said.
Sanitec, a major European supplier, reported that the profitability of its bathroom business was 13.7% of net sales in 1999-the same level as in 1998. After a slow start to the year, due to a cold winter in some markets, the company reported that profitability improved progressively throughout the year, along with increasing sales.
Building industry investments in Germany remained flat. Sanitaryware market growth was very modest, with slightly optimistic expectations for 2000.
Building activity in France increased twice as much as the overall economy in 1999, thus showing the highest growth rates in ten years. According to Sanitec, reduced value-added tax (VAT) rates will also keep the level of renovation high in the near future.
In spite of the rather depressed economic situation in Italy, the bathroom market enjoyed growth in renovation thanks to fiscal incentives. The growth is forecast to continue in 2000.
After a slow start, demand in Sweden, Norway, Finland and Russia developed favorably in the second half of the year. Especially important was the start of recovery in the Swedish construction market from the low level of the past years. The Danish market continued to grow throughout the year, Sanitec reported.