Ongoing globalization has reached the market for heating and hot water solutions. Larger manufacturers of thermo-
technology products meanwhile have an international presence and generate a growing portion of their revenues outside their home markets. So far, however, there is no truly global thermotechnology manufacturer who holds material shares of the three large continental markets, i.e. North America, Asia and Europe.

Europe, the most important market for thermotechnology products, continues to be dominated by German suppliers. Last year’s league table was again led by three German manu-
facturers – BBT Thermotechnik, Vaillant Group and Viessmann Werke – followed by the British Baxi Group and the Italian MTS Group, who switched places as compared to the previous year. Other companies with significant market shares are Ferroli and Riello from Italy, Atlantic from France, Remeha/De Dietrich from the Netherlands/France and Weishaupt from Germany.
Between them, these top ten held just under 70 % of the European market for gas and oil-fired heating systems in 2006. When including the heavily fragmented sub-markets for systems using renewable energies, the share of the top ten declines to 58 %. These relatively new markets are characterized by a large number of smaller specialist companies, many of which operate only regionally.

Market consolidation continues

Competition in the thermotechnology sector continued to increase in the past year. The growing technological standards of the systems, combined with strong pressure on prices led to continued market consolidation with numerous cooperations and acquisitions, especially in the western European heating technology market. Nearly all of the larger manufacturers are currently adopting an increasingly international positioning with a view to benefiting from future growth opportunities, also outside western Europe.
The consolidation process goes hand in hand, however, with a major structural change. The trend towards highly efficient heat generators powered by a growing proportion of renewable energies continues. As a result, a large number of new players such as manufacturers of electric heat pumps, solar collectors or solid fuel heating systems have entered the market. Accordingly, 2006 saw increased investment in companies with this kind of special expertise.

Competition has also become much more intense at the wholesale level. Faced with declining margins, wholesalers have stepped up their efforts to cut costs, increase their range of services and expand their activities across regional and national borders. This led to a growing number of mergers and acquisitions in the past two years, in which larger wholesalers in Europe played an active role. The Richter + Frenzel Group, for instance, took over 80 branches with roughly 700 employees from the bankrupt Schulte Group in mid-January 2007. Wolseley, the world’s largest wholesaler of sanitary and heating products, also announced four more acquisitions at the beginning of 2007. Since August 2006, Wolseley has made 29 acquisitions with a sales volume of 560 million British pounds in Europe and North America. The French Saint-Gobain Group also attracted attention with a large number of cross-border acquisitions, most of them in Europe. Nevertheless, the acquisitions in the wholesale sector represent only isolated activities, which have not changed the sector structure materially so far.