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.