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[January 2008]
Slight Fall in Italian Ceramic Tile Production
The preliminary results for Italian ceramic tiles in 2007 point to a slight fall in production (down 1.1%) with the situation of stagnation expected to continue into 2008. At the same time the Italian tile industry continues to face severe difficulties in terms of industrial costs with a 1.92% increase in the first six months of 2007 compounded by the record fall in the dollar. This has squeezed the profit margins of Italian companies to an extent that depends on their size and degree of organisation.
These are a few of the most significant trends explored in 'Dollar, oil prices, subprime mortgage crisis and interest rates: what impact will they have on the competitiveness of the Italian ceramic tile industry?', a conference held on 17 December 2007 at the Confindustria Ceramica headquarters. The welcome address by Confindustria Ceramica Chairman Alfonso Panzani was followed by talks given by Marco Mingarelli (Chairman of the Association's Statistical Committee) and Giorgio Barbolini from Banca Popolare dell'Emilia Romagna. These were followed by addresses by Susanna Rubbiani from Banca Popolare dell'Emilia Romagna, logistics expert Nicolò Pascale Guidotti Magnani, Prof. Andrea Landi from the University of Modena and Reggio Emilia and Luigi Bidoia from Prometeia. The concluding address was given by Professor Angelo Tantazzi, Chairman of Borsa Italiana.
The 2007 estimates for Italian tiles point to a production of 563 million square metres (-1.1%) and total sales of 560 million square metres (-1.1%). These consist of 390 million square metres of exports (-1.6%), stable domestic sales of 170 million square metres and more than 115 million square metres (and increasing) of tiles produced by Italian companies abroad in 2006.
While sales in Western Europe remained substantially stable, they increased sharply in new EU member countries (+7.4%) and the other Eastern European countries (+5.7%). Sales in North America slumped (-13.1%) due to the weak dollar and the crisis in the US property market.
The Balance Sheet Analysis produced by Banca Popolare dell'Emilia Romagna demonstrates that membership of a group and having a company organisation structure are crucial elements for ceramic companies in terms of profitability. This is demonstrated by the 2006 operating margins, which in groups reached almost 9% of net profits (8.09% in 2005) compared to 6.82% in medium-sized companies (6.24% in 2005). Figures for smaller companies are even lower.
According to the analysis of cost trends conducted by the Confindustria Ceramica Studies Centre, production input prices showed a smaller increase in the first half of 2007 than in 2006 (+1.92%) due to a smaller rise in energy prices (+1.81% for electricity while thermal energy remained unchanged). The increase in manufacturing costs was driven above all by the increase in costs of glazes and colours (+6.24%) and the sharp rise in packaging costs (+10.29%).
Also for next year the main indicators for the sector point to substantial stability. The small (0.6%) growth in exports towards the EU is very significant because this area accounts for 52% of total Italian exports and because it represents a trend reversal after years of contraction. The same applies to the recovery in the Middle East and North Africa (expected 2.8% growth) and new EU member countries (+3.9%). The domestic market remains stationary at sales volumes of 2007. The swings in the dollar will continue to play an essential role over the next year in the United States, where sales of Italian ceramic tiles are expected to suffer a further decrease (-2.6%).
Looking globally, albeit with a slower rate of growth than in the past, world ceramic tile consumption rose by 6.7% in 2007 and now stands at 8.4 billion square metres. Consumption in Italy is stable (+1.7%), while the area that has been most affected by the crisis in international markets is unquestionably North America (-12.1%). The new EU countries have shown a strong trend (+9%), as have the other European countries where the 10.7% increase is mainly due to the dynamism of the Russian market. The Middle East and North Africa have performed strongly (+8.2%), while Brazil (+6.6%) is the powerhouse of Latin America. Consumption in Asia is continuing to increase rapidly (+8.8%) due to the driving force of China, where consumption exceeded 3 billion square metres in 2007.
World consumption is expected to experience further growth in 2008 (+6.6%). A 1.1% increase in Italy is forecast compared to a 0.5% drop in Spain. The new EU countries will maintain the positive trend in 2008, albeit with lower values, while excellent performances will continue to be recorded in the Middle Eastern, Russian, Asian and Latin American markets.
ENDS