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| KN40003 |
| KEY NOTE DOMESTIC HEATING : FEBRUARY 2003 |
| Overview |
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This report covers: boilers, radiators, pumps, controls, energy-efficient developments, Gas versus Electricity, oil prices, solid fuel, radiator manufacturers, household consumption of fuel, domestic heating, central heating, Gas, Electricity, energy suppliers, installers, builders' & plumbers' merchants, space heating,
Companies covered include: Barlo Group, Baxi, Caradon Plumbing, Danfoss Randall, Honeywell Control Systems, MTS, Rettig Heating, Vaillant, Vokera, Worcester Heat Systems,
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Table of Contents Executive Summary
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Engine| Executive Summary 1 |
| 1. Market Definition 8 |
| REPORT COVERAGE 8 |
| MARKET SECTORS 8 |
| By Type of Fuel 8 |
| Product Sectors 9 |
| Boilers 9 |
| Radiators 9 |
| Pumps 9 |
| Controls 9 |
| MARKET TRENDS 9 |
| Energy-Efficient Developments 9 |
| Changing Dynamics in the Space-Heating Sector 10 |
| Gas Versus Electricity 10 |
| The Impact of Fluctuating Oil Prices 10 |
| Fashion Helps Revive Demand for Solid Fuel 10 |
| Boiler Technology 10 |
| A Difficult Market for Radiator Manufacturers 11 |
| Radiator Developments 11 |
| Demand Drives Pumps and Controls 11 |
| ECONOMIC TRENDS 11 |
| Gross Domestic Product 11 |
| Table 1: Index of Growth in Gross Domestic Product at Current Prices (index 1995=100), 1997-2001 12 |
| Inflation 12 |
| Table 2: Rate of Inflation ( percent), 1997-2001 12 |
| Unemployment 13 |
| Table 3: Unemployment Rate and Actual Number of Unemployed Persons ( percent and 000), 1998-2002 13 |
| Household Disposable Income 13 |
| Table 4: Index of Household Disposable Income (index 1971=100), 1997-2000 14 |
| MARKET POSITION 14 |
| The UK 14 |
| Overseas 14 |
| 2. Market Size 15 |
| HOUSEHOLD CONSUMPTION OF FUEL 15 |
| Table 5: Estimated Household Consumption of Fuel by Value at Current Prices (£m at rsp), 1997-2001 15 |
| THE TOTAL MARKET 15 |
| Table 6: The UK Domestic Heating Market by Value at Current Prices (£m at msp), 1998-2002 16 |
| Table 7: The Total UK Market for Domestic Heating by Sector by Value at Current Prices (£m at msp and percent), 2002 17 |
| BY MARKET SECTOR 18 |
| Boilers 18 |
| Table 8: The Central-Heating Boilers Sector by Value at Current Prices (£m at msp), 1998-2002 18 |
| Space Heating 19 |
| Table 9: The Space-Heating Sector by Value at Current Prices (£m at msp), 1998-2002 19 |
| Table 10: UK Sales Volumes of Electric Space-Heating Products (000), 1999 and 2000 20 |
| Radiators 21 |
| Table 11: The Central-Heating Radiators Sector by Value at Current Prices (£m at msp), 1998-2002 21 |
| Heating Controls 22 |
| Table 12: The Heating-Controls Sector by Value at Current Prices (£m at msp), 1998-2002 22 |
| Pumps 22 |
| Table 13: The Central-Heating Pumps Sector by Value at Current Prices (£m at msp), 1998-2002 23 |
| OVERSEAS TRADE 23 |
| Table 14: International Trade in Central Heating Boilers, Radiators, Air Heaters and Distributors by Value (£m), 2001 24 |
| Table 15: International Trade in Central Heating Boilers, Radiators, Air Heaters and Distributors by Value (£m), January to September 2002 24 |
| Intra-EU Trade 25 |
| Table 16: UK Intra-EU Trade in Central Heating Boilers, Radiators, Air Heaters and Distributors by Value (£m), 2001 25 |
| Extra-EU Trade 25 |
| Table 17: UK Extra-EU Trade in Central Heating Boilers, Radiators, Air Heaters and Distributors by Value (£m), 2001 26 |
| 3. Industry Background 27 |
| RECENT HISTORY 27 |
| Corporate Activity 27 |
| Energy Efficiency 27 |
| Gas and Electricity Supply 27 |
| Current Developments 27 |
| INDUSTRY SYNOPSIS 28 |
| Table 18: Key Financial Ratios for the Leading 15 UK-Based Companies Involved in the Manufacture of Central Heating Boilers and Radiators (£000, percent and £) 28 |
| NUMBER OF COMPANIES 28 |
| Table 19: Number of UK VAT-Based Enterprises Engaged in the Manufacture of Central Heating Radiators and Boilers by Turnover Sizeband, 2002 29 |
| EMPLOYMENT 29 |
| Table 20: Number of UK VAT-Based Local Units Engaged in the Manufacture of Central-Heating Radiators and Boilers by Employee Sizeband, 2002 30 |
| REGIONAL VARIATIONS IN THE MARKETPLACE 30 |
| DISTRIBUTION 31 |
| Boilers and Radiators 31 |
| Heating Controls 31 |
| Electrical Heating Appliances 31 |
| Fuel 32 |
| HOW ROBUST IS THE MARKET? 32 |
| LEGISLATION 33 |
| Part L Building Regulations 33 |
| Price Controls 33 |
| Heating Installations 34 |
| Product Standards 34 |
| KEY TRADE ASSOCIATIONS 34 |
| Association of Manufacturers of Domestic Electrical Appliances 34 |
| Association of Plumbing and Heating Contractors 34 |
| Boiler and Radiator Manufacturers Association Ltd 34 |
| Combined Heat and Power Association 35 |
| Council for Registered Gas Installers 35 |
| Heating and Ventilating Contractors' Association 35 |
| Heating, Ventilating & Air Conditioning Manufacturers Association 35 |
| HETAS 35 |
| Institute of Domestic Heating & Environmental Engineers 35 |
| National Fireplace Association 35 |
| Solid Fuel Association 36 |
| 4. Competitor Analysis 37 |
| THE MARKETPLACE 37 |
| MARKET LEADERS 37 |
| Barlo Group PLC 38 |
| Company Structure 38 |
| Current and Future Developments 38 |
| Financial Results 38 |
| Baxi Group Ltd 38 |
| Company Structure 38 |
| Current and Future Developments 39 |
| Financial Results 39 |
| Caradon Plumbing Ltd 39 |
| Company Structure 39 |
| Current and Future Developments 40 |
| Financial Results 40 |
| Danfoss Randall Ltd 40 |
| Company Structure 40 |
| Current and Future Developments 40 |
| Financial Results 40 |
| Honeywell Control Systems Ltd 40 |
| Company Structure 40 |
| Current and Future Developments 41 |
| Financial Results 41 |
| MTS (GB) Ltd 41 |
| Company Structure 41 |
| Current and Future Developments 41 |
| Financial Results 42 |
| Rettig Heating Ltd 42 |
| Company Structure 42 |
| Current and Future Developments 42 |
| Financial Results 42 |
| Vaillant Ltd 42 |
| Company Structure 42 |
| Current and Future Developments 43 |
| Financial Results 43 |
| Vokera Ltd 43 |
| Company Structure 43 |
| Current and Future Developments 43 |
| Financial Results 43 |
| Worcester Heat Systems Ltd 44 |
| Company Structure 44 |
| Current and Future Developments 44 |
| Financial Results 44 |
| OTHER COMPANIES 44 |
| Boilers 44 |
| Radiators 44 |
| Pumps and Controls 45 |
| OUTSIDE SUPPLIERS TO THE INDUSTRY 45 |
| Energy Suppliers 45 |
| Table 21: Energy Consumption by Domestic Users by Fuel Source (000 tonnes of oil equivalent), 1997-2001 45 |
| Housebuilders 46 |
| Installers 46 |
| Builders' and Plumbers' Merchants 46 |
| ADVERTISING AND PROMOTION 47 |
| Table 22: Main Media Advertising Expenditure on Domestic Heating Products (£000), Years Ending September 2001 and 2002 47 |
| Exhibitions/Trade Shows 48 |
| 5. Strengths, Weaknesses, Opportunities and Threats 49 |
| STRENGTHS 49 |
| WEAKNESSES 49 |
| OPPORTUNITIES 50 |
| THREATS 50 |
| 6. Buying Behaviour 51 |
| AVERAGE HOUSEHOLD EXPENDITURE 51 |
| CONSUMER PENETRATION 51 |
| Ownership of Central Heating Systems 51 |
| Table 23: Ownership of Central Heating by Type of Fuel ( percent of households), 1999 and 2001 52 |
| Purchasing Patterns 52 |
| Table 24: Purchase of Central Heating Systems in the Past 12 Months by Type of Fuel ( percent of households), 2001 52 |
| Ownership of Central Heating Systems by Region 53 |
| Table 25: Ownership of Central Heating Systems by Fuel Type by Region ( percent of households), 2001 53 |
| Ownership of Central Heating Systems by Social Grade 54 |
| Table 26: Ownership of Central Heating Systems by Fuel Type by Social Grade ( percent of households), 2001 54 |
| LIFESTYLE CHANGES 54 |
| ENERGY PRICES 55 |
| Table 27: Fuel Price Index for the Domestic Sector (index 1990=100), 1996-2001 55 |
| 7. Current Issues 56 |
| THE ROLE OF THE INTERNET 56 |
| INTERNATIONAL MARKETS 56 |
| THE IMPACT OF THE EURO 56 |
| THE POLITICAL SCENE 57 |
| PRODUCT DEVELOPMENT 57 |
| CONSUMER DEMAND 57 |
| CORPORATE ACTIVITY 58 |
| 8. The Global Market 59 |
| REGIONAL VARIATIONS 59 |
| EUROPEAN ELECTRICITY MARKET 59 |
| 9. Forecasts 60 |
| INTRODUCTION 60 |
| Gross Domestic Product 60 |
| Table 28: Forecast Growth in Gross Domestic Product ( percent), 2003-2006 60 |
| Inflation 61 |
| Table 29: Forecast Rate of Inflation ( percent), 2003-2006 61 |
| Unemployment 61 |
| Table 30: Forecast Claimant Unemployment Rate (million), 2003-2006 61 |
| FORECASTS 2003 TO 2006 62 |
| Table 31: The Forecast UK Domestic Heating Market by Value (£m at msp), 2003-2006 62 |
| FUTURE TRENDS 63 |
| Demographics 63 |
| Market Segmentation 63 |
| Boilers 63 |
| Radiators 63 |
| Controls 63 |
| Space Heating 64 |
| Globalisation 64 |
| Product Development 64 |
| Technological Changes 64 |
| 10. Company Profiles 65 |
| BAXI GROUP LTD 66 |
| Danfoss Randall Ltd 68 |
| Honeywell Control Systems Ltd 70 |
| Mts (gb) Ltd 72 |
| Rettig Heating Ltd 74 |
| Vaillant Ltd 76 |
| Vokera Ltd 78 |
| Worcester Heat Systems Ltd 80 |
| 11. Further Sources 82 |
| Associations 82 |
| General Sources 83 |
| Bonnier Information Sources 84 |
| Government Publications 85 |
| Other Sources 85 |
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The UK domestic heating market was worth an estimated £968m at manufacturers' selling prices (msp) in 2002, an increase of 3.5 percent on 2001. Growth has been erratic since the beginning of the 1990s, as the market has been affected by changing levels of consumer confidence and spending.
The market includes both central-heating and stand-alone space-heating systems and equipment. Products covered by this report include central-heating boilers, radiators, pumps and controls, and space-heating appliances. The boilers sector has benefited from changes in building regulations, which now require more energy-efficient products, such as condensing boilers. Pumps and controls have also experienced growth, driven by the wider adoption of more sophisticated products.
The radiators sector has been affected by overcapacity within the industry, which has placed increasing pressure on prices and margins. While space-heating appliances tend to perform better in periods of bad winter weather, niche sectors, such as solid-fuel stoves and heaters, have benefited from a fashion focus since late 1999. A major factor influencing the performance of the UK domestic heating market has been changes to the Building Regulations, which have encouraged the specification of more energy-efficient appliances, particularly in the new housebuilding sector. Other factors that have benefited the market include the recent period of relatively buoyant consumer spending, boosted by low inflation and low interest rates. Consumer confidence has also been relatively high, with many householders choosing to invest in improvements to their homes and taking the opportunity to replace or upgrade their heating systems.
Corporate activity since late 1998 has meant that the supply side of the market is becoming increasingly consolidated, and a group of multinational companies, with production facilities in a number of countries, are emerging as the market leaders.
The domestic heating market is likely to be the subject of successive innovations in the short to medium term, with the possible introduction and wider adoption of combined heat and power (CHP) systems and the use of alternatives to fossil fuels, such as solar energy and fuel-cell technologies. Emphasis is also likely to focus on energy efficiency improvements, with some more aesthetically pleasing products, e.g. new radiator designs, likely to continue to provide high-value niche sectors.
Text © 2003 Key Note
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