Italian tiles: indicators fall but the sector remains strong

At the annual press conference presenting the sector’s data, Confindustria Ceramica’s newly elected Chairman Franco Manfredini revealed that although the companies are succeeding in maintaining their market shares, the crisis is causing significant losses for the Italian ceramic industry.

During the first three months of 2009, tile production fell by almost 30% and turnover by around 23%. These figures are certainly alarming, but they must be interpreted in the light of the particularly strong performance in the reference quarter in 2008. Indeed, the association is expecting to end 2009 with smaller losses than in the first quarter.
One of the positive elements of these first few months of the year is the value of investments made by companies in technological innovations and in optimising their production processes, which have already reached 278 million euro. This is a significant figure considering that the corresponding value for the whole of 2008 was 304 million euro (up 0.45% on 2007).
New aspects under study and which will be evidenced at Cersaie include growing attention to all aspects of eco-sustainable production, new areas of use of tiles, a special focus on urban design, ever thinner sizes and functionalised surfaces.

The Italian ceramic industry in 2008

In 2008 the Italian ceramic tile industry experienced falls in production and sales.
Production dropped to 512.5 million sq.m (-8.33%) and turnover to 5.51 billion euro (4.63% down on 2007). The quantities sold totalled 506.24 million square metres (-7.48%).
However, average prices performed well with 3.07% growth, demonstrating the value of Italian products. This increase helped to limit the fall in turnover but did nothing to improve companies’ profit margins, which were severely affected by the increases in production costs, particularly those of commodities and natural gas which are the crucial weakness of Italian companies.
The average profitability of a representative sample of 48% of the entire sector amounted to 7.84%, with a gross operating margin of around 0.96%.

The outlet markets for Italian tiles

The outlet markets for Italian tiles remain highly international. Out of a total of 506.2 million sq.m sold in 2008, 151.1 million sq.m (29.9% of the total) were sold in Italy (-9.92%), whereas 355.1 million sq.m, 70.1% of the total, were exported (-6.40%). Turnover generated in Italy amounted to 1,473 million euro (-8%), whereas export turnover totalled 4,044 million euro (-3.34%).

As regards outlet markets, 55.89% of the 355.14 million sq.m of Italian tiles were sold in European markets while the remaining 44.11% were shipped to other continents.
Within Europe, Germany saw a 8.21% fall in sales and France 3.41%. The best performances were in Portugal (+62.2%), Poland (+22.9), Slovakia (+13.2%), the Czech Republic (+5.5%) and Austria (+3.2%). Exports plummeted in countries such as Latvia (-36.8%), Ireland (-34.7%), Estonia (-23.7%) and Spain (-22.9%). There were smaller yet significant falls in Sweden (-17.8%), Great Britain (-17.1%) and Hungary (-12.5%).
The contraction in more distant markets (-6.41%) was due to the crisis in the American market (United States -26.07%) as well as the downturn in Oceania (-13.42%). Strong performances were reported in Asia (+7.93%), Africa (+7.40%) and countries such as Russia (+3.95%).

Internationalisation of production offsets falls in Italy

Each year we are seeing an increase in international manufacturing activities controlled by Italian ceramic companies. In 2008 the results achieved by the 20 foreign companies partially or totalled controlled by nine Italian groups almost entirely offset the losses experienced by the Italian production sector.
Italian production abroad totalled 126.49 million square metres (+8.63%). Sales amounted to 131.5 million sq.m, corresponding to a total turnover in excess of a billion euro (+9.68%).

78.88% of production outside Italy was in European countries (+10.83%), the rest in the United States.


The structure of the sector

On 31 December 2008 there were 195 ceramic tile companies operating in Italy, eleven fewer than the previous year, with a total workforce of 26,364, down by 3.11%. These companies resorted extensively to all forms of social shock absorbers both last year and during the first few months of 2009. There were a total of 290 factories (10 fewer than in 2007) and 578 kilns (63 fewer).

An analysis of the Italian ceramic tile industry’s 2008 results will be provided in the forthcoming issues of the magazines Tile Italia and Ceramic World Review published by Tile Edizioni.