Ceramic Industry

Worldwide Sanitaryware Sales Show Mixed Results

August 11, 2000
Photo courtesy of Egeseramik.
The U.S. market for plumbing fixtures & fittings rose at a compound annual rate of 8.8% from 1992 to 1997, fueled by strength in new construction, which expanded at a 2.8% annual pace when measured in constant dollars. The boom in residential construction enabled this market to advance an additional 7% in 1998, with dollar volume reaching $8.6 billion. Although new construction will level off over the next several years, renovation and repair expenditures will increase, supporting average annual gains of 5.0% for this market, as sales are expected to reach $10.9 billion in 2003.

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.

Editor's Note

Forecast information for the U.S. sanitaryware industry was obtained from Market Studies, Inc., a company that specializes in researching and analyzing industries in the U.S. For more information, visit www.marketstudies.com. Other market and forecast information was obtained from the companies referenced in the article.