APC 2015 Annual Report Download - page 180

2015 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC178
BUSINESS REVIEW
4TRENDS IN SCHNEIDER ELECTRIC’S COREMARKETS
>
1. Trends in Schneider Electric’s
coremarkets
1.1 Industries and machine manufacturers
Industry market struggled throughout 2015, facing severe
headwinds:
Falling commodity prices (mainly O&G, metals) have led a sharp
drop in commodity sectors capex. This step down has generated
strong negative impacts on global industry market: O&G sector is
one of the fi rst end-users in metals, construction engines, turbines,
water treatment and professional services. Companies exposed to
this O&G supply chain cut their own capex, opex and inventories to
align them with lower demand.
Companies which benefi ted from lower energy costs were reluctant
to invest, given the generally weak economic environment,
overcapacities and high level of debt. Companies preferred
to restore the balance sheet, or to reduce selling prices (due to
increasing competitive pressure).
In China, industrial production and manufacturing investment
have slowed markedly, depressed by deterioration in global trade,
overcapacities and decrease in construction sector (which is the
largest end- user of heavy industry).
In other new economies, industrial markets recorded a slowdown
on the back of lower commodity prices, declining demand from
China, capital outfl ow and a high level of debt.
1.2 Non residential and residential buildings
Non residential buildings
In the US, non residential market growth slowed down in 2015.
Manufacturing buildings reported strong growth thanks to the
chemicals and transportation equipment sectors. Construction
in the offi ce and retail sectors decelerated. Institutional buildings
segments slightly rebounded in 2015, driven by the private sector
component (mainly in healthcare facilities) as public spending
remained under pressure.
In Western Europe, non residential construction remained sluggish
in 2015. Manufacturing, offi ce and commercial buildings suffered
from the deteriorated global economic environment. Education and
healthcare segments were constrained by public-sector austerity.
Non residential construction declined in two major markets,
Germany and France. Spain and Ireland increased, benefi ting from
economic reforms. In Italy, the market stabilized after several years
of decline .
In China, non residential construction decreased further. The main
reasons were the economic slowdown and new consumption
patterns (e-commerce has a major negative impact on commercial
buildings).
In Australia, non residential construction declined. Industrial, offi ce
and commercial buildings all fall as well as social & institutional
buildings (marked by a sharp plunge in the Health segment).
In several new economies, non residential construction was
hampered by several headwinds: lower demand from China,
negative impact from lower oil and commodities prices on the
revenues of commodity exporter countries, currency depreciation
and capital outfl ow.
Non residential activity accelerated in in India thanks to improvement
in the regulatory and fi nancing environment.
Residential
Residential markets marginally decreased in 2015, with varied
positions among major regional blocks.
In the US, residential construction increase, driven by multi-family
market.
In Western Europe, market improved gently. France, Italy and
Denmark recorded a decline. Germany and Great Britain grew
slightly whereas Ireland and the Netherlands surged.
In China, residential construction continued to fall. At end of 2013,
China’s property sector had reached a turning point, due to strong
construction oversupply and lower demand for property. Despite
a gradual improvement in housing sales in 2015, developers have
continued to reduce housing starts in order to reduce inventory.
In other new economies, residential market declined as a whole.
Residential construction has dropped, notably in Russia, Ukraine,
Brazil and Venezuela, hit by gloomy economic situation and weak
consumer confi dence. On the contrary, Asian new economies and
Africa continued to grow in 2015.