News 2016

FEP: Signs of general market improvement
According to the European Federation of the Parquet Industry (FEP) activity overall seems to be picking up again in most of Europe, after several years of a subdued market situation. The year started off well in many reporting European countries.

With a few exceptions, many countries were able to get out of the red zone during the first quarter of 2016, when compared to the same period of last year. FEP: “Although the reported parquet sales figures are not yet spectacular, the trend is definitely turning to positive.” A brief per country recap is provided in the table below.

Austria
The information provided to FEP points in the direction of an increase of parquet sales in the order of 2 to 3% despite a still subdued activity on the private housing segment.

Baltic countries

The Baltic countries parquet markets seem to be performing better than during the first quarter of 2015, with an estimated rise of 2% in sales figures.

Belgium
The few indications available point towards stable consumption and production figures.

Denmark
The Danish market remains on a slightly positive note, with a 1% improvement backed by building permits also returning to green figures.

Finland
The situation in Finland remains the most problematic among European countries, with an estimated decrease of 5 to 10% in parquet sales. The influence of the Russian context is considered as an important factor explaining this hesitant market development.

France
The French parquet market is also emerging from its torpor and is now slowly back to positive sales figures, with an estimated 3% gain during the first months of 2016.

Germany
Compiled data indicate that parquet sales in the first quarter of the current year increased by an estimated 3%, reflecting the slight growth in new housing permits. The migrant crisis does not impact the market as cheaper solutions are chosen for their housing. Competition from LVT remains particularly harsh.

Italy
Altogether, parquet sales found their way back to positive figures, with a reported increase of 1 to 2%. The main difficulties encountered are linked to a general liquidity shortage and huge competition from ceramic tiles.

Netherlands
The market is characterised by an increase in the order of 2% parquet in consumption compared to the first quarter of 2015.

Norway
Norway is another Nordic market facing difficulties, with parquet sales down by an estimated 4% in Q1/2016.

Poland
Polish parquet sales are improving by an estimated 2%.

Russia
Parquet sales follow a downward trend. Although Board members did not give a quantitative indication, they unanimously feel that the market activity has significantly dropped.

Sweden
The year started out relatively well in Sweden, with +2% in parquet sales. However, the pace reduced compared to the end of 2015. The construction activity is following the right path. Here also, LVT proves to be a strong competitor. Renovation activities are slightly hit by the downward revision of subsidies (interest rates).

Spain
Spanish parquet sales are improving by an estimated 2%.

Switzerland
Switzerland reports a decrease of 2% in parquet consumption. This unusual evolution for a traditional parquet country is mainly due to the fall by 30% of the housing activity, which is directly linked to the second home initiative, forbidding new homes in recreational areas. Nevertheless, renovation is slightly increasing.

GFA/FEP, April 2016
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Researchers IC expect 3% annual sales growth
After years of stagnation and a downturn, the European market for parquet and wooden floors can be optimistic about the future again. In 2015 sales increased by 2.2% to 82.7 million m2 in the top 11 European countries. An annual growth of 2 % in volume is expected by 2019. A recent study by Interconnection Consulting shows that increasing competition introduced by Eastern European and Asian manufacturers will not allow prices to rise significantly in the next few years.

By 2019, Interconnection Consulting expects an annual sales growth of 3 %, which is only one percentpoint higher than the volume growth and which corresponds to the expected inflation in the Eurozone. The reason for this is apparently the growing market presence of Asian manufacturers. The UK, Benelux and Germany serve as European test markets for Asian producers. It is, therefore, no coincidence that the average prices have barely risen in the past years in those countries due to increased competition, or, as in the case of Germany, have actually declined, according to the reseachers. While sales rose by 1.4 percent in Germany, the turnover increased only by 0.7 %. In addition to the Asian suppliers who are entering the European market, Eastern European producers accounted for intensified price competition in Europe as their production costs were cheaper than in Western Europe. However, price differences between the producers are also arising mainly due to the large range of products and the basis of qualitative differences. By using scaling effects Western European manufacturers try to remain competitive, according to Interconnection Consulting.

Last year, all the surveyed countries (Germany, Austria, Switzerland, Italy, Spain, France, the Benelux, Denmark, Sweden, Great Britain, Poland ), except for France, noted a growth both in quantity as well as value in the market for wooden and parquet floors. Nevertheless, Interconnection expects France to experience growth rates of 1.8 % in quantity from 2016 to 2019. The highest growth rates recorded in the past year were in the UK ( + 4.8% in value ), Poland (+ 4.5 % in value) and Denmark (+ 4.3%). Even Italy, after years of decline, achieved positive growth figures again for the first time last year and increased its sales by 0.7 %.

Multilayer parquet floors have a 83.9 % market share in volume. Three-layer parquet floors make up a market share of approximately 70 % in volume and thus constitute the majority of floors in demand. The price of most multilayered wooden floors has hardly changed in recent years. The cost of the most popular variant in the studied countries averaged 28.4 Euros per m2, making it cheaper than hardwood floors (31,8 Euros ). Especially in the parquet floor industry prices have fallen by around one Euro per m2 due to strong competition since 2010. The market share of the solid wood variant constituted 13.5 % last year.

By providing certificates such as FSC, producers of wooden flooring are increasingly trying to meet their customer's growing demand for sustainability and resource conservation. Interconnection Consulting predicts that due to the costs related to laying wooden floors, part of the clientele of the wooden floor segment is going to withdraw. "Price-sensitive buyers will turn to resilient floor coverings (vinyl, LVT, etc.) as well as laminate flooring," explains Jan Hudak, author of the study. Nevertheless, Interconnection Consulting expects a trend for real wooden floors to become customized and exclusive. By 2019, this product group is expected to grow annually by 7% in value.

In addition to some ‘Local Heroes’ with a very strong presence in the markets of a specific country, there are companies such as the Bauwerk Boen Group, Kährs, Hamberger, Weitzer Parkett, Tarkett or Barlinek, which are very often dominant in several markets. The 100 largest parquet manufacturers in the 11 studied countries made up a combined market share of 65.9 % in 2015 according to the sold quantity, representing an increase of 0.5 % compared to 2014 in terms of market concentration.

As far as the distribution of hardwood and parquet floors is concerned, mainly indirect sales dominate constituting a volume of 95.6% of total sales. Only 4.4% of the floors are distributed directly by manufacturers, and to be more specific - smaller manufacturers with a local production who adapt their products to specific customer requirements and are mainly active in the high-end area. Currently a small part is already sold online, however there is still an upward growth potential according to market analyst Jan Hudák. A view of the indirect sales shows that in Europe around 72.5% is distributed through wholesalers now. A closer look at the distribution channels reveals that a significant part of the market is made up by the wood trade (e.g. the wood land), while in some countries it accounts for even more than 50% of the market. If we were to consider the distribution channels that go directly to the end customer, 1/3 of the market would go to craftsmen (flooring installers, wood flooring contractors, decorators, carpenters / joiners) and around 20% to DIY. Specialist stores, chain stores, furniture shops and home decorators also play a vital role, concludes Interconnection Consulting (interconnectionconsulting.com).

Sales in global market regions

GFA/Interconnection Consulting, March 2016
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FEP: market progressively back to green figures
After a year in which the consumption figures of the European Parquet Industry contracted by more than 6%, the first estimates for 2015 - showing market growth of 0.5% - paint a more optimistic picture.

FEP’s (European Federation of the Parquet Industry) preliminary forecast for the year which just ended indicates a stabilisation in parquet sales across Europe, with an upward tendency during the last months. The slight global European market growth of 0.5% should be seen as a first prognosis subject to variations, in anticipation of the complete data to be communicated at FEP’s annual General Assembly next June in Thun, Switzerland.

FEP: “As was witnessed in the past few years, the results show some variation from country to country but, for the first time since long, the Southern European markets, including Spain, seem to be gaining in momentum. From a regional perspective, the good news comes mainly from the Swedish and Hungarian markets both showing a sound growth. The Netherlands, Belgium, Poland and to a lesser extent France are also performing well while the important German, Austrian and Swiss parquet markets remain stable at a high level.”

As far as specific parquet products are concerned, wooden planks continue to attract customers, says FEP. The gap between large planks and 3-strip parquet products is ‘slowly but surely’ closing. “Competition from other flooring solutions is still fierce. This is especially the case with LVT’s, which are gaining market shares, also in the residential market.”

“Generally speaking, the captains of the parquet industry point to increased prices of raw materials due to shortages in the market,” according to FEP. “The fact that it is becoming increasingly difficult for consumers to differentiate parquet from competitive flooring alternatives with a wood look surface, is also a growing source of concern for parquet producers.” They are nonetheless convinced, FEP concludes, that parquet has “a really bright future as it remains the only REAL product versus wood look-a-like products made from vinyl or ceramics.”

GFA/FEP, January 2016
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EPLF: laminate flooring sales minus 3.1%
In 2015, worldwide sales of 452 million m2 of European-produced laminate flooring (previous year: 467 million m2) were reported by the 20 ordinary members of the EPLF (i.e. the manufacturers of laminate flooring). The resulting minus of 3.1% is relativized in view of a Turkish member having left the association at the end of 2014.

Once again, the EPLF explains, growth rates varied between regions during 2015. Western Europe (including Turkey) was weaker, whereas Eastern Europe saw a slight upturn. Figures rose positively as well in Asia, and the biggest gains were recorded in North America. EPLF laminate flooring sales in South America also showed an upward trend last year.

With one Turkish member having left the EPLF, the Western European sales of the laminate flooring industry (including Turkey) fell from 282 million m2 in 2014 down to 254 million m2 in real figures in 2015, i.e. a plunge by 10%. In Germany – the largest single regional market in Central Europe – the substitution trend continued: the EPLF believes that a shift in favour of LVT flooring is the reason for the decline on the German market down to around 66 million m2 (2014: 69 million m2), showing a minus of 4.6%.

Also included in the EPLF sales statistics for Western Europe is Turkey, where laminate sales for the association experienced another significant drop during 2015, showing a decline of approx. 44% down to 32 million m2 (2014: 57 million m2).
EPLF: “The reasons behind this are complex: a major Turkish member having left the EPLF at the end of 2014, and the anti-dumping proceedings brought forward by the Turkish Ministry of Economy against some German flooring manufacturers, which ran until summer 2015, have both contributed to the decline.” Another factor to be considered, according to the EPLF, is the ‘general weakening’ of the Turkish economy. Despite worsening figures, Turkey remains the third-largest target market for EPLF members.

France has shown a slight downturn with 37 million m2 (2014: 39 million m2) and in 2015 now occupies second place in Europe. The United Kingdom, despite a booming construction market, did not continue its positive upward trend for the EPLF members, showing slight losses of 3% with a sales figure for 2015 of 31 million m2 (2014: 32 million m2), which puts the country in fourth place after Turkey. The Netherlands market grew in 2015 with +8%, and at 19 million m2 (2014: 18 million m2), managed to retain fifth place. With sales of 15.3 million m2 (2014: 14.6 million m2) and roughly +5%, Spain holds on to sixth place.

Despite a difficult situation in Eastern Europe during 2015, EPLF laminate sales were able to keep up in this region. At 111 million m2 (2014: 110 million m2), European laminate flooring producers achieved a slight increase in this region of 1%. In Russia, 29 million m2 were sold (2014: 28 million m2), which resulted in a growth rate of 2%. Poland saw an improvement of 7% (2014: +6%) up to 28 million m2 (2014: 26 million m2). The subsequent places in the ranking are occupied by Rumania with 11 million m2 (2014: 11 million m2), Hungary with 6 million m2 (2014: 6 million m2), Bulgaria with 5 million m2 (2014: 4 million m2) and the Ukraine with a good result after all, according to the EPLF, of nearly 5 million m2 (2014: 8 million m2).

The EPLF sales curve for North America has been rising steeply since 2013 and that trend has continued in 2015, with +32% up to 39 million m2 (2014: 29 million m2). At 25 million m2 (2014: 18 million m2), the USA saw gains in 2015 of 37%. Canada achieved a good increase of 24% in 2015 with 14 million m2 (2014: 11 million m2).

Total sales in 2015 of European-produced laminate in Asia Pacific stand at around 17 million m2 (2014: 15 million m2), which means an increase of 14% (following +20% the previous year). Again, the biggest growth was registered in the Chinese market, including Hong Kong. Exports from high-end products made in Europe are increasingly well received here – 2015 saw sales of 5.6 million m2 (2014: 5 million m2), which equates to an increase of 10% over the previous year. Israel has improved slightly at 2.5 million m2 (2014: 2.2 million m2) and Saudi Arabia has registered good growth with 3 million m2 (2014: 2 million m2). The markets in India and Australia, with their traditionally low turnover level, have also shown growth in 2015.

South America showed an overall positive trend in 2015 with 17 million m2 (2014: 16 million m2) and +9%. Sales in Mexico reached around 4.5 million m2 (2014: 3.9 million m2). Also Argentina showed better results with 1.8 million m2 (2014: 1.4 million m2). Compared with the previous year, the Chilean market remained stable with sales of 7 million m2 (2014: 7 million m2).

Sales in global market regions
Sales Statistics 2015 (source: EPLF)


GFA/EPLF, January 2016
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