Sabaf s.p.a. Annual Report 2014 - ENG - Ch 2

TR

IT BR

2

CORE MARKETS

CN

INTERNATIONAL OPERATIONS

30

International operations and core markets INTERNATIONAL PRESENCE The Sabaf Group is one of the world’s leading manufacturers of components for household gas cooking appliances, with a market share of around 50% in Europe and a global share of about 10%. Its core market consists of manufacturers of household appliances, particularly cookers, hobs, and ovens.

The majority of Sabaf’s sales consist of the supply of original equipment, whereas sales of spare parts are negligible.

MANAGEMENT

A market share of around 50% in Europe and a global share of about 10%

SALES NETWORK

SALES OFFICES

Main production lines Valves and thermostats

Burners

Hinges

Accessories

These components regulate the flow of gas to covered burners (in the oven or grill) or exposed burners; thermostats are characterised by the presence of a thermal regulator device to maintain a constant pre-set temperature.

These are the components that, via the mixing of gas with air and combustion of the gas used, produce one or more rings of flame.

These are the components that allow a smooth and balanced movement of oven, washing-machine or dishwasher doors when they are opened or closed.

The Group also produces and markets an extensive range of accessories, which supplement the offering of the main product lines.

SABAF - ANNUAL REPORT 2014

Sales by product line

â‚Ź/000

0

year

5,000

10,000

Brass valves

15,000

20,000

25,000

30,000

36,160

Special burners

20,251

Accessories and other revenues

12,928 6,963

Brass valves

14,613

Light alloy valves

27,618

Thermostats

13,350

Standard burners

38,222

Special burners

18,943

Accessories and other revenues Hinges

11,571 6,650

Brass valves

18,601

Light alloy valves

23,524

Thermostats

13,074

Standard burners

2012

39,337

Special burners

18,850

Accessories and other revenues Hinges

11,226 6,121

Brass valves

26,537

Light alloy valves

23,265

Thermostats

2011

14,560

Standard burners

42,631

Special burners Accessories and other revenues Hinges

22,210 10,598 8,782

Brass valves

31,788

Light alloy valves

20,027

Thermostats

2010

14,829

Standard burners

41,405

Special burners Accessories and other revenues Hinges

45,000

12,288

Standard burners

2013

40,000

34,006

Termostati

Hinges

35,000

13,741

Light alloy valves

2014

31

INTERNATIONAL OPERATIONS AND CORE MARKETS

21,097 10,959 10,792

T O TA L

136,337

130,967 130,733 148,583 150,897

32

INTERNATIONAL DEVELOPMENT OF SABAF: CHALLENGES AND OPPORTUNITIES €/000

Sales by geographical area

ANALYSIS OF SCENARIO

PERFORMANCE DATA

Italy The crisis of recent years has significantly transformed the household appliances sector in Italy. Today, the major Italian manufacturers of cooking appliances focus on the high-end segment of the market or on special products. With a strong emphasis on exports, they continue to achieve excellent results.

Sabaf offers its Italian customers extremely high quality and a differentiated range of components that allow customers to 42,277 | 31.0%

42,662 | 32.6%

promote “Made in Italy” in international markets.

The great majority (estimated to be around 80%) of Sabaf’s sales in Italy are, in fact, destined for our customers’ household appliances exports.

Only a small proportion is destined for the Italian consumer market, which continues to be affected by the slump in the property market as well as negative demographic trends.

45,597 | 34.9%

56,321 | 37.9%

61,648 | 40.8%

Western Europe The production of household appliances has also been heavily cut in Western Europe in recent years: some manufacturers have closed down, others have re-located (in particular in Poland and Turkey).

8,716 | 6.4%

7,465 | 5.7%

Production for the high-end segment remains in Western Europe, where Sabaf’s objective is to increase its market share significantly.

7,337 | 5.6%

11,215 | 7.5%

11,561 | 7.6%

Eastern Europe and Turkey Turkey is today the European country that produces the greatest number of household appliances. In this regard, the opening of a production facility in Turkey and the development of new trade relations are key to supporting the growth strategy.

The Turkish domestic market is potentially of greater and grea-

36,198 | 26.6%

29,300 | 22.4%

ter importance: the average age of the population, the number of new families and the increase in incomes are converging indicators that point towards growing demand for consumer goods. The Group’s strategy includes further development in activities in Turkey in the coming years.

33,236 | 25.4%

Key

37,459 | 25.2%

2014

2013

32,553 | 21.6%

2012

2011

2010

SABAF - ANNUAL REPORT 2014

INTERNATIONAL OPERATIONS AND CORE MARKETS

ANALYSIS OF SCENARIO

33

PERFORMANCE DATA

Asia and Oceania In China, new standards come into force on 1 April 2015 in relation to gas hobs. The new standards introduce three different classes of energy efficiency, and only 10-15% of gas hobs currently on the market are able to satisfy the highest level of efficiency. Sabaf has developed a burner especially for the Chinese market, that guarantees the highest classification to built-in hobs and ovens. Production of this burner is expected to begin at the start of 2015.

11,204 | 8.2%

11,864 | 9.1%

Sabaf has also developed a dedicated burner for the Indian market, which it successfully began to supply in 2014. The potential is huge, even if the time horizons are long, considering how underdeveloped the market is.

In the Middle East, Sabaf enjoys a solid presence and an excellent reputation. Access to these markets continues to depend on the political situation in the major markets of the region.

12,306 | 9.4%

13,328 | 9.0%

15,476 | 10.3%

Central and South America For its future development Sabaf can rely on its solid presence, including production facilities, (a plant in Brazil has been operational since 2001).

18,324 | 13.4%

24,375 | 18.6%

A major project is under consideration to start production in Brazil of special burners. The launch is expected in 2016.

21,895 | 16.8%

19,838 | 13.4%

17,467 | 11.6%

Africa Capitalising on the solid reputation of its brand, its geographical closeness and its long-term presence, Sabaf is increasing its presence in the region.

The urban growth plans in northern Africa represent the

12,574 | 9.2%

10,410 | 7.9%

key to possible market opportunities, despite difficulties relating to the current political situation in some of the major countries.

6,950 | 5.3%

6,524 | 4.4%

7,056 | 4.7%

North America and Mexico Its wide range of innovative and efficient products, together with relations with the main producers, and its good technical reputation, provide the Group with new opportunities.

7,044 | 5.2%

4,891 | 3.7%

Sabaf’s market share is growing steadily in the premium segment.

3,412 | 2.6%

3,898 | 2.6%

5,136 | 3.4%

34

TRENDS IN THE COOKING APPLIANCE MANUFACTURING SECTOR For years now the sector has tended to outsource component design and production to highly specialised suppliers that, like Sabaf, are active in the world’s main markets and are able to supply a range of products tailored to the specific requirements of individual markets.

In addition, the trend to internationalise production is becoming more accentuated, with production increasingly shifting to countries with low-cost labour and lower levels of saturation.

Moreover, the emergence of new players at the international level is causing over-supply. This in turn is leading to pressure from competition and is bringing about greater concentration in the sector. However, this trend is less pronounced for kitchen ranges than for other household appliances: in the cooking segment, design and aesthetics on the one hand and less intensive investment on the other hand also permit the success of small, highly innovative producers.

CORE MARKETS In Western Europe, which accounts for about half of the end-user market for Sabaf products, the level of saturation reached by cooking appliances (i.e. the number of households owning such appliances) is close to 100%. Purchases of new appliances are therefore mainly replacement purchases. Moving house or the purchase or refurbishment of a home are often occasions for the purchase of a new cooking appliance.

The market trend is therefore directly influenced by the general economic trend and, in particular, by households’ disposable income, consumer confidence and

housing market trends. In this context, the household appliances sector has, for many years, been experiencing a situation where demand is stagnant, most notably in the peripheral countries.

Conversely, in other markets the saturation level is often much lower. Faster economic growth rates and a more favourable demographic trend than in Western Europe are creating huge opportunities for groups such as Sabaf that are able to work both with multinational household appliance manufacturers and with local manufacturers.

A varied picture Manufacturers of gas cooking appliances – Sabaf’s core market – consist of: • large multinational groups with a well-established international presence in sales and production and possessing strong brands; • manufacturers located in countries with low-cost labour that aim both to exploit opportunities in their home markets and to grow fast globally; • manufacturers focused on specific markets in which they are the market leader; • manufacturers (mainly Italian export firms) occupying segments featuring greater product differentiation (built-in hobs and ovens, free-standing cookers, for example).