Heating April Topics

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1 International Market Strategy Topics Czech Republic CEZ Signed a Privatisation Contract for Albanian Electricity Distribution Europe ARBONIA FORSTER HOLDING AG Does Well in Difficult Conditions Europe EUROFER Examines HRC Imports for Possible Dumping Action Europe NORD STREAM Gas Pipeline On Right Track Europe VAILLANT and HONDA Seal Deal on Micro-CHP Development Germany VAILLANT GROUP Sees Revenue and Profits Grow Poland 19,500 Flats Completed in January 2009 Russia Russian Government to Support Residential Housing Construction Russia NIBE Buys Russian Electric Heating Firm United Kingdom Heat Pumps to Gain Entry to APPENDIX Q World Growth with Renewable Energies Monthly Special Europe Market Summaries for 13 'Group 1' Countries Published International strategic market research and consultancy on building product and related markets

2 Czech Republic : CEZ Signed a Privatisation Contract for Albanian Electricity Distribution Company The Government of Albania and CEZ GROUP signed a contract for the sale of 76% of the shares of the ELECTRICITY DISTRIBUTION COMPANY of Albania (OSSH). CEZ won the bid by the tendering commission back in October The decision was then confirmed by the Albanian Government after further consultations. IFC, a member of the WORLD BANK GROUP, advised the Albanian Government on structuring the transaction and executing an open, transparent and competitive bidding process. After a number of negotiations the contract was signed, valuing the majority stake in OSSH at 102 million. The transaction is expected to be completed in the next few months. Source: Europe: ARBONIA FORSTER HOLDING AG Does Well in Difficult Conditions AFG ARBONIA-FOSTER-HOLDING AG, based in Arbon, achieved record sales and good operating results for the last financial year despite the ongoing deterioration of the economic environment in the second half of the year. Total revenues increased by 6.7% to CHF 1,570.6 million ( 1,024.9 million). The individual divisions performed more or less well depending on their markets and the industries they cater for, and their contribution to overall results varied accordingly. The largest division, Heating Technology and Sanitary Equipment, which generates around 40% of group revenues, increased net revenues by 4.2% to CHF million ( million) in 2008 compared to CHG million ( million) in It would have performed even better were it not for the sudden collapse in demand from the UK, after the British real estate crisis and the dramatic fall in the value of sterling against the Euro and Swiss franc. Source: 2

3 Europe: EUROFER Examines HRC Imports for Possible Dumping Action European steel producers association EUROFER is concerned by a rise in imports of hot rolled coil from Ukraine and Turkey into the European Union over the last few months. The rise is worrying because it reverses the trend displayed by HRC imports from other developing countries, most notably China and India. It also goes against the trend in other products. Source: Europe: NORD STREAM Gas Pipeline On Right Track The NORD STREAM gas pipeline project has just taken an important step by publishing its environmental assessment report and construction can begin in early NORD STREAM had published an environmental assessment report covering the whole pipeline. The next stage is to launch the public participation and consultation procedure. In the five countries for which the project needs permits, NORD STREAM executives are confident that these permits can be obtained relatively quickly. According to NORD STREAM consultations with the administrations around the Baltic Sea, they should be able to conclude permit procedures and start construction in early The NORD STREAM project representative explained that a number of problems had been overcome. Permission to build on the Estonian side had been denied by the authorities in Talinn, so NORD STREAM will not take that route. Sweden had also raised objections to a planned maintenance platform close to the island of Gotland, so a technical solution was found to allow the pipeline to be built without the platform. It was confirmed that NORD STREAM projects will bring an additional gas line. Two of NORD STREAM's shareholders are from Germany (each with 20%) and both are receiving gas via Ukraine. Each year, 140 billion m 3 of Russian gas are currently passing through Ukraine, and NORD STREAM will be providing 55 billion m 3. Source: 3

4 Europe: VAILLANT and HONDA Seal Deal on Micro-CHP Development Heating and air conditioning specialist VAILLANT and Japanese technology giant HONDA are joining forces to develop a gas fired micro-combined Heat and Power (micro-chp) system for the European market. A joint announcement said the micro-chp products would initially be targeted at German homeowners to provide cost effective heat and power in detached houses. Managing director of the VAILLANT GROUP, Dieter Müller, said: "We are pleased to have been able to win the world's leading engine manufacturer, HONDA, as a partner. With this co-operation we will be able to expand even further our portfolio of energy-saving and environmentally friendly products. Dieter Müller, CEO VAILLANT GROUP, and thepresident of HONDA MOTOR EUROPE (North), Takayuki Arima, celebrate the micro-chp deal. In Japan and the United States, HONDA is already offering small gas-powered micro-chp units with over 80,000 systems already sold and installed throughout both countries. Meanwhile, VAILLANT has an existing range of gas-engine-powered mini-chp systems for large detached and multifamily houses, and commercial buildings. VAILLANT will develop the complete hydraulics of the heating system, the control technology, and the connection technology to ensure the most efficient and demand-oriented use of energy. Combined heat and power (CHP) allows the simultaneous production of heat and electricity, but at the moment in Europe it is mostly used for industry, district-heating systems and large commercial buildings. Micro-CHP systems are a major focus for research and development within the heating market, with several companies looking to bring new products to the market in the near future. These companies include BAXI, ENERGETIX, CERAMIC FUEL CELLS and CERES POWER. Source: 4

5 Germany: VAILLANT GROUP Sees Revenue and Profits Grow German HVAC giant VAILLANT GROUP saw modest revenue growth of around 2% in 2008 from 2,388 billion in 2007 to 2,438 billion. Operating profit before interest and tax rose 14% from 175 million in 2007 to 199 million in Announcing the results at ISH, VAILLANT GROUP managing director, Ralf-Otto Limbach, said the company s focus on energy efficient systems and its comprehensive service offer had helped it through an extremely difficult environment. The manufacturer highlighted increased sales of renewable equipment as particularly encouraging, with reports of sales growing by 55% in heat pumps and 60% in solar thermal installations. The VAILLANT GROUP also made an announcement about its expansion in the USA and Asia. Source: Poland: 19,500 Flats Completed in January 2009 The Polish Central Statistical Office (GUS) announced that 19,541 flats were completed for use in January 2009, an improvement of 33.5% on January 2008, but down 37% on December Between January and December ,833 flats were completed, which translates as an increase of 24% compared with Source: Russia: Russian Government to Support Residential Housing Construction The Russian Government is ready to maintain the volume of completed residential construction in 2009 at the same level at which it stood last year 63 million m 2. Public officials even expect that last year s level could be exceeded by 4 million m 2. Officials are developing a range of measures to support the construction industry, and some steps have already been taken for example 2 billion was spent on purchasing housing for the military last year, and a further 4.7 billion will be allocated this year. Analysts doubt, however, whether such a goal can be achieved given the lack of credit resources. Source: 5

6 Russia: NIBE Buys Russian Electric Heating Firm BRG Consult Newsletter Swedish heating firm NIBE has increased its stake in Russian electric boiler and water heating specialist CJSC EVAN to 75%. This follows the acquisition of an additional 24% of shares in the firm based in Nizhny Novgorod to the east of Moscow. NIBE has been building its stake in CJSC EVAN since December 2007 and expects to complete a complete takeover in the first half of CJSC EVAN has 150 employees, annual sales of around 9.1 million, an operating margin of just over 20% and a nationwide distribution network. Source: United Kingdom: Heat Pumps to Gain Entry to APPENDIX Q APPENDIX Q is expected to be extended to heat pumps in the next few months. Once it is a recognised technology under SAP, the door should be opened to the broader specification of heat pumps. SAP APPENDIX Q allows the energy performance of new technologies and advanced versions of existing technologies to be evaluated for inclusion in SAP assessments. Kelly Butler, director of THE ELECTRIC HEATING and VENTILATION ASSOCIATION sees the move as a significant stepping stone to a future where electric heating in general and heat pumps in particular will be prominent. By 2020, seven million homes are predicted to be fully refurbished and heat pumps are expected to play a major part. Over time technologies, that are not necessarily delivering great carbon savings, will improve as the grid moves towards more renewable and nuclear-generated solutions for electricity. Source: 6

7 World: Growth with Renewable Energies In total, BOSCH THERMOTECHNOLOGY grew by 7% in 2008, with sales in Germany up by 12% on the previous year. The federal government's market incentive programme led to record sales, especially in the solar thermal sector. BOSCH THERMOTECHNOLOGY reported the strongest growth in America in spite of the economic downturn which was mainly driven by rising demand for energy-efficient electric heat pumps in the USA. By 2015, BOSCH THERMOTECHNOLOGY aims to generate 30% of its sales with products harnessing renewable energies. In addition, BOSCH THERMOTECHNOLOGY will push ahead the launch of new, innovative heating technologies such as micro co-generation. In 2009, the company plans to test an electricitygenerating unit based on Stirling technology in a field test involving 500 devices in several European countries. When using decentralised energy generation with Stirling technology, virtually all the waste heat from electricity generation is used to heat the residential building, achieving an overall efficiency of up to 95%, which also means low CO 2 emissions. Mass production is scheduled to start in Source: 7

8 Monthly Special: Market Summaries for 13 'Group 1' Countries Published BRG CONSULT is pleased to announce that it has recently published preliminary 'Product Summaries' for the 13 largest (Group 1) countries as follows: - France - Germany - UK - Italy - Spain - Belgium - Netherlands - Austria - Sweden - Poland - Russia - Czech Republic - Turkey. BRG CONSULT's offering within the heating sector has evolved in line with the changing pace of the current and likely future market situation and has therefore been extended to cover selected renewable technologies in addition to traditional/conventional products. Therefore, the full detailed coverage of BRG CONSULT's 2009 programme includes 30 country coverage of the European markets for: - boilers & burners - radiators - water heaters - heat pumps - solar thermal systems - solid fuel/biomass boilers. For more detailed information on BRG CONSULT's heating studies, please contact Mr. David Harrop (dharrop@brgconsult.com) or alternatively call +44 (0) A detailed proposal is available upon request. 8