2023 has been nearly 2 months, this year’s market situation in the end, is the industry’s most concerned about the focus. Shouya noted that a number of mainstream enterprises at home and abroad recently, through activities, information scripts and other forms of disclosure of their eyes this year more severe challenges, as well as the expectations of the bathroom market this year. Some enterprises believe that the rising prices of raw materials and energy and labor shortages lead to increased labor costs, is the more prominent industry challenges this year; some companies said that the weakening of consumer demand for home improvement in the post-epidemic era will affect the development of the company, and some companies have been psychologically prepared for a double-digit decline in the overall scale of 2023. Domestic and international companies are relatively optimistic, as the real estate market has rebounded to restore confidence, and some companies have said they will seize the opportunity to achieve better development.
High prices of raw materials, labor costs continue to increase
In 2023, the factors that directly increase the pressure on business, such as rising raw material prices and increasing labour costs, will continue to be one of the biggest challenges facing sanitary ware companies.
In 2023, Duravit will continue to face economic weakness in many parts of the world, rising energy prices, high raw material costs and a shortage of skilled labour, said Stephan Tahy, CEO of Duravit, in an information note on 1 February. But Stephan Tahy himself remains optimistic about 2023, given the company’s strong willingness to invest and the team’s strong ability to implement the company’s strategy globally. He reveals that Duravit will continue to focus on local production, supply and sourcing as a driver of continuous innovation with a ‘local-to-local’ strategy, which will drive the goal of climate neutrality by 2045.
It is understood that Duravit’s revenues in 2022 will again reach a record high of €707 million (approximately RMB 5.188 billion), up from €608 million in 2021, an increase of 16 per cent year-on-year. The press release reveals that the company is “on track in the Chinese market, despite challenging conditions.”
Geberit is also concerned about the cost of running the business. In January, Geberit CEO Christian Buhl told the press that we expect 2023 to be “challenging” for the European construction industry. He said that rising interest rates, a greater focus on upgrading heating equipment rather than sanitation systems to cope with rising energy prices and the end of the home improvement boom that was popular during the epidemic were all negative factors for the company’s growth. In addition, labour costs are also an issue for Geberit, with analysts previously stating that wages issued by Geberit will increase by around 5-6% in 2023.
Weak demand, market likely to continue to decline
In addition to production costs and other operational factors, the general market environment is also shaping the future development of companies. Based on the performance of the market so far last year, some companies are “bearish” on the real estate and home furnishings industry, and are even preparing for a decline in sales in 2023, and have issued announcements to “prepare investors”.
Keith Allman, president and CEO of Masco, said in an information note that the market environment will remain challenging in 2023 and that “the company is preparing for a double-digit decline in overall volume”. At the same time, Keith Allman believes the long-term fundamentals of the renovation market remain strong and that the company will focus on improving margins and aggressively capitalising on these long-term needs. With Masco’s industry-leading multi-channel offering, excellent balance sheet and disciplined capital allocation, it believes Masco is well positioned to create long-term value for shareholders.
Another US-listed company, Fortune Group (FBIN), has also expressed concern about sales conditions, with the company’s recently released financial report forecasting a 6.5% to 8.5% contraction in the global market and a 6.5% to 8.5% contraction in the US domestic real estate market in 2023. As a result, the company’s sales are expected to decrease by 5% to 7% in 2023, with operating margins in the range of 16% to 17%.
The Fortress Group further stated that the company’s successful spin-off of the cabinet business has brought greater value to both shareholders and allowed the company to focus on its independent affairs. Going forward, the Company will combine its decentralised structure with its separate businesses to form a unified operating model in order to better improve business efficiency. In addition, the company plans to bring its supply chain resources under a unified leadership team. These changes will not only allow the Fortune Group to achieve its long-term goals, but will also help the company meet the short-term challenges it faces in 2023.
Post time: Feb-25-2023
