Heatrae Sadia comment: Q1 2018

Paul Rivett, Managing Director Heatrae Sadia is BMBI’s Expert for Water Heating.

The first quarter of 2018 was difficult with three days of lost sales due to bad weather conditions. In the water heating sector, this resulted in 5% lower year-on-year sales compared to Q1 2017. The question is whether the construction industry can recover these sales during the rest of the year, or whether they have been lost to the snow.

While the bad weather suppressed sales of domestic cylinders, sales of electric boilers and electric commercial water heating performed better. For example, electric commercial water heaters that are compliant with the latest 2017 energy products directive, and labelled appropriately, have grown by more than 15%, while some manufacturers are either withdrawing from the market or not improving products to comply.

Flue legislation, and issues associated with it, continue to influence the growing use of electric rather than traditional gas boilers in urban dwellings – for both replacement and new installations. This can only accelerate as awareness increases.

The high-profile publicity on single-use plastics, that we discussed last quarter, continues – already resulting in a two-stage positive influence for this sector. Firstly publicity is driving the growth in sales of point-of-use chilled water machines. This in turn positively influences sales of boiling water dispensers; more often than not part of the same system. The recent call for evidence from the government regarding single-use plastics will also make manufacturers review their use of plastics in packaging and delivery. A review could well result in reduction, or even elimination of plastics in packaging.

In summary, the first quarter of the year has left the sector with some catching up to do yet demand for new housing has stayed strong. Other areas are holding up, in spite of more conservative forecasts. We move forward with cautious optimism for 2018.

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