Study Report HVAC Overlapping Study BSRIA Ltd – Worldwide Market Intelligence June 2009 8,000.0 7,000.0 6,000.0 5,000.0 4,000.0 3,000.0 2,000.0 1,000.0 0.0 2003 2004 2005 2006 2007 2008E 2009F 2010F 2011F 2012F Report 52093/1 Product focus Air conditioning Heating Renewables VRF Condensing wall hung gas boilers Ground/ water to water Rooftops Non-condensing wall hung gas boilers Air to water –split systems Indoor pack aged Floor standing atmospheric gas boilers Exhaust air/ water (combined with heat recovery) US ducted Oil/gas pressure jet boilers Air to water – cylinder-integrated water heater Chillers Solid fuel boilers Solar thermal flat plate collectors Fan coils Radiators Solar thermal vacuum tubes Moveables Towel rails Heat recovery Windows Electric storage water heaters Micro-CHP AHU Electric instantaneous water heaters Biomass Minisplits Gas storage water heaters Chilled ceilings Gas instantaneous water heaters Cylinders Products included in the market data, trends and forecasts Products included in the individual company sales data Report 52093/1 2 De Dietrich Remeha Profiles - Manufacturers Heating specialist Netherlands & France Danfoss Components specialist Daikin Denmark AC specialist Japan/Europe Baxi Heating specialist Toshiba Carrier UK AC specialist USA/Japan/Europe Fujitsu AC specialist JCI Japan/Europe HVAC & R USA Mitsubishi Electric AC specialist Sanyo Ferroli Japan/Europe AC specialist Heating specialist Japan/Europe Italy MHI Riello AC specialist Heating specialist Vaillant Japan/Europe Italy Heating specialist Germany Bosch Thermotechnik LG Heating specialist AC specialist CIAT Germany Korea/Europe Ariston AC specialist France Viessmann HeatingReport specialist 52093/1 Hitachi 3Heating specialist Italy AC specialist Germany Japan/Europe Profiles - Distributors Germany France UK Spain Italy GC Group Algorel Dean & Wood Cealco Cambielli Frigotechnik Brossette Graham Grupo HDF Centro Gamma HAGRO Comafranc Plumbase/ Salvator Escoda Delta Reiss Kälte-Klima D&C Plumbline Thisa Europa 2000 GmbH & Co DSC PTS Plumbing Almagrupo Idroteam Richter + Frenzel Rexel Wolseley Idrotrade Sonepar Report 52093/1 4 Contents Part I – Market trends (34 slides) Part II – Market impacts (14 slides) Part III – Supplier analysis (108 slides) Part IV – Distributor analysis (56 slides) Part V – What next? (43 slides) Profiles: Manufacturers – 19 groups (~ 30 slides per profile) HVAC distributors – 26 companies (~10-15 slides per profile) Report 52093/1 5 How big is the market in the 5 countries – by volume? (2008) Domestic boilers Commercial Water heaters HEATING 4.4 M units boilers 6.3 M units 10.8 M 0.09 M units units Minisplits < 5kW Minisplits >5kW VRF AIR CONDITIONING 1.5 M units 1.2 M units 0.07 M 2.8 M units units Heat pumpsSolar thermal 0.6 M units RENEWABLES 0.2 M units3.17 M sq.m. /systems 579,700 systems Report 52093/1 6 Total market size in 2008 by product, € million Market size for Germany, UK, Spain, France, Italy, 2008 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Domestic Commercial Water Minisplits Minisplits VRFs Heat pumps Solar boilers boilers heaters <5kW >5kW thermal Report 52093/1 7 Key 5 countries - Market trends and forecast heat pumps, by volume (‘000 units), 2003-2012 300 250 200 Water to water 150 Air to water Exhaust air 100 50 0 2003 2004 2005 2006 2007 2008E 2009F 2010F 2011F 2012F Report 52093/1 8 Forces in the AC market – Industry competition Germany UK Industry Competition Industry Competition - The number of split suppliers, especially in the VRF sector has increased in the last -Partnerships for training between manufactures and distributors few years. -Heating companies e.g. Vaillant and Viessman entering minisplits - There are especially additional Chinese companies, which try to get in the market, market thorough OEM agreements with Midea but the problem is the distribution -Heavy discounting expected especially for VRF, as there will be - Single splits are weather dependent and therefore it can happen that there is a high limited amount of projects. price competition (DIY) if the weather is bad and a lot of units are on stock. -Downturn in market may see less established brands pull out of UK - No production of splits in Germany. market - As in former years we have in Germany market segments with very low prices (e.g. -The internet will have limited impact on AC as it is engineered DIY stores, Elektrofachmärkte), low prices (Stulz with Haier), and with high prices (e.g. Stulz with MHI, Daikin). - Pre and after sales services are important in Germany, but also product guarantees France (e.g. Panasonic 5 years, Daikin 3 years). Industry Competition - Germany is a relatively small split market with many suppliers. The consequence is - Hands on distribution for air conditioning a strong competition in the market, especially in the tender process. and heating systems - Products with energy label have increasing importance (energy prices!). - Heat pumps sold through air conditioning and heating distribution networks - Availability of stock and widespread regional presence as a key to success Italy - Mix of distribution routes, but higher control of network via own branches Industry Competition - Increased competition due to market downturn in both commercial and residential markets Spain - Easing competitive pressure from new entrants from China in the residential market Industry Competition - Increasing bargaining power of wholesalers and retailers - Mature market regarding splits, VRF has market to expand - Consumers more educated to air conditioning product and over all in the mini and maxi versions eroding the lower and therefore increasingly demanding mid power ranges of chillers. - Economic crisis affecting sales - A large number of companies involved in the minisplit - Competitors moving towards commercial market which is less market. dramatically affected by sales drop - Large size of stock levels, allow a smooth distribution. - Retail market crash hits Chinese products severely - Post service and maintenance has become task forces by key players. - High discount levels offered in current environment. Supply market overview – the strategic groups Japanese AC Other Asia AC Europe AC German Other Europe Others Heating Heating Daikin LG CIAT Bosch T Ariston Danfoss Mitsubishi Electric Vaillant Ferroli JCI Viessmann Riello Fujitsu Hitachi Baxi MHI De Dietrich Sanyo Toshiba Carrier This type of distinction will be used in all the presentation, with the same colour code Report 52093/1 10 Details of overlaps in HVAC and Renewables Overlap in markets, by value, Europe, 2008, € million*1 AC doing Heating € 33.6 million Daikin Heating doing AC Ariston € 69.8 million Bosch Ferroli Riello Vaillant AC doing Renewables*2 € 137.0 million CIAT Daikin Hitachi Mitsubishi E Toshiba/Carrier € 497.6 million Sanyo Heating Doing Renewables*3 Ariston Baxi Bosch Danfoss DeDietrich Report 52093/1 Ferroli *1 based on all products and countries relevant for the purpose of this study 11 Riello *2 excluding PV and heat recovery sales Vaillant *3 excluding PV and heat recovery sales Viessmann Market share of the 19 groups by country of origin, % Germany Heating Sum of Total 31% Japan AC 40% Country of origin Sector of origin Denmark Components Italy Heating 0% 12% USA Controls France AC 2% Korea AC 4% 3% UK Heating France Heating 6% 2% Clear leadership of Japan AC and Germany Heating groups Report 52093/1 12 Market share in France of the JCI manufacturers in heating, cooling and Hitachi renewables market, Euro M Fujitsu (1) Ferroli Renewables Danfoss Heating Air Conditioning Daikin CIAT BT Baxi Ari ston 0% 5% 10% 15% 20% 25% 30% Market share in France of the manufacturers in Viessmann heating, cooling and renewables market, Vaillant Euro M (2) Toshiba Carrier Sanyo Renewables Heating Air Conditioning Riello De Dietrich Remeha Mitsubishi Electric MHI LG 0% 5% 10% 15% 20% 25% 30% Strengths and weaknesses – Tier one HEATING Ar iston Baxi Germany Germany Water heaters France Water heaters France Commercial boilers UK Commercial boilers UK Domestic boilers Italy Domestic boilers Italy Spain Spain Bosch Thermotechnik Vaillant Germany Germany Water heaters France Water heaters France Commercial boilers UK Commercial boilers UK Domestic boilers Italy Domestic boilers Italy Spain Spain Report 52093/1 15 The suppliers viewed by distributors - Riello “Very good technical “Large range of support / post sale products service” Is becoming strong in renewables” “Expected to reduce in Riello the French market” “Riello brand via dedicated agents only, competitor for wholesalers “Very good at winning public sector bids in Italy” Beretta products via wholesalers” Opinions expressed during interviews with up to 27 leading distributors in Germany, France, UK, Italy, Spain Report 52093/1 16 Strengths of Mitsubishi Electric World wide VRF Very strong position in market leader along residential and Daikin commercial markets Expanding its share upon the renewables Strong focus on & heating markets, the CO2 emissions overall in Europe reduction Strong position in the air to water heat pumps Report 52093/1 17 The distribution routes in Germany - AC Distribution for single and multisplits, % of volume Manufacturer single & multi splits Daikin, Airwell, MHI, ME, Hitachi, LG, Carrier, Toshiba, Sanyo, Samsung, etc 30-35% <10% 45 -50% about 5% <=10% Importer/Distributor Specialized AC National sales offices Manufacturer of Retailer DIY e.g. Kaut (Sanyo), Stulz Wholesaler of manufacturer (MHI, Haier), Krone Heating Systems e.g. Praktiker,