Excellent precision landing 2005 with 2-digit growth
Shrinking market for the trade in Germany
Against the positive development of E/D/E, still no impetus was expected from the market environment in 2005. Quite to the contrary: the once again disappointing results in the building sector with building activities and planning permissions again hitting the bottom line, were once more responsible for the shrinking sales wholesalers in Germany had to face.
As a consequence, the market for sanitary and heating again declined in 2005 by approx. 2 per cent.
In the window and door fittings sector, a shrinkage of 9 and 5 per cent respectively was reported, whereas a minus of 5 per cent was likewise reported in building components and fastening technology.
But also the steel sector, in 2004 skyrocketing due to exorbitant price development, reported a drop in sales as a result of lacking demand combined with considerable fluctuations in price. Thanks to product innovations, the downmarket for power tools was stopped, whereas standard hand tools were down again by about 5 per cent due to changing structures in the craft trade.
High-quality precision tools for individual use reported a positive development thanks to a sound export industry and a metal processing industry that boasts full order books. The same applies to welding equipment and operation facilities.
Results reported by the E/D/E departments
With an increase of 84.5 per cent to 578 million euros, sanitary & heating showed a particularly positive development in the past year. The cooperation with the VGH Group, Vereinigung von Großhändlern für Haustechnik, Marketing und Vertrieb GmbH, with their place of business in Brühl, had a great impact on this result.
Positive developments were also obvious in the commodity areas, with an increase of 4.7 per cent for fittings, building components, building equipment and fastening technology to almost 1 billion euros. A 6.2 per cent increase was reached in technical trade, personal protection equipment and workshop products. The tool, machinery, industrial products sector reported a growth by a total of 5.6 per cent to 861 million euros. Also this sector performed again significantly better than the market. Caused by the fluctuation in price, steel trading followed an adverse trend. The associated member firms reported a decline in turnover of 11.9 per cent.
Growth Drivers at E/D/E
E/D/E’s growth by approx. 25 per cent in recent years is mainly the result of soliciting new wholesalers and cooperation partners in Germany and Europe. Excellent performance packages of E/D/E in commodity supply and services were the convincing element for them.
Thereby, 54 new wholesalers were solicited in 2005 alone, a contribution of 365 million to the E/D/E turnover.
Due to the economic situation and tighter rating systems of the banks in the provision of financial funds to the retail trade, 45 trade companies with an E/D/E sales volume of 50 million euros were lost.
Activities in Europe further expanded. Meanwhile, E/D/E is operating in 22 countries. The Europe business recorded a 25 per cent growth to more than 300 million euros in the last year obtaining a 10 per cent share in the total turnover. It is planned to extend it considerably in the next years to come and towards the end of the decade 1 billion euros are targeted. Extensive new contacts are currently developed.
Securing the economic future of the site
The Wuppertal site has constantly been extended and will further advance in the future. Last year, investments were mainly made in logistics (24-hours service in Germany, 24/48 –hour service in Europe) and in sophisticated IT systems.
30 new employees were recruited leading to a workforce of 680. Further recruitments are planned for 2006. With 40 trainees, E/D/E reached an all-time high. The next logistics step will be analysed and planned in the following months, requiring millions in capital expenditure, while further jobs will be provided.
In the next two years, E/D/E will aim at moderate growth of a sound 3 per cent per annum - whilst the domestic market will remain difficult. According to E/D/E there are currently no realistic indications for notable growth potentials in the German building sector. E/D/E and its members can only achieve growth in the construction-related product sector by gaining market shares at the expense of other competitors.
The consolidation phase in the next two years should be used in the company to provide the conditions for further growth.
At present, a new strategy project, Challenge 2012, is worked out in detail on all management levels and its implementation prepared. Growth is to be achieved in the medium term by amalgamating with other cooperation partners and by a reviewed Europe strategy. The financial stability of E/D/E, its innovative power and capital investment strategy, as well as the competent know-how of the E/D/E teams are key factors for gradually advancing to market leadership in Europe. E/D/E is on the right track and will not be discouraged by economic problems.
This year, E/D/E will celebrate its 75th anniversary. A wide variety of activities for the partners from the member and supplier groups are scheduled for the autumn, such as the great industry meeting anniversary on 19th and 20th September at the Kölner Messehallen, with all product areas of E/D/E together with its members and contractual suppliers taking part.