2020 Outlook1
Despite the extraordinarily high degree of uncertainty caused by the COVID-19 pandemic, the International Monetary Fund (IMF) has recently upgraded its world economic outlook slightly. Thus it expects the global economy to grow by 5.5% in 2021 and 4.2% in 2022. The forecast for 2021 has therefore been raised by 0.3 percentage points compared with expectations in October of last year. This is the result of the additional political support measures in some major economies, above all in the USA and Japan, for one thing, and the expectation that the increasing availability of vaccines will boost economic activity and can compensate for the short-term stress caused by rising infection rates, for another.
At the same time, the recovery will be incomplete and uneven. If you look at the group of developed economies more closely, for example, economic activity in the USA and in Japan will reach its level at the end of 2019 again as early as in the second half of 2021. In the euro zone and in the United Kingdom, on the other hand, this process will take right up until 2022. Among the emerging and developing markets, China will recover most quickly, because it has in place highly effective mitigation measures, an extensive public investment program and supporting liquidity from the central bank. In those emerging countries that are dependent on oil and tourism, the recovery will take longer in light of a subdued outlook for the price of oil and a slow normalization process for international tourism.
Even though new restrictions as part of the current wave of infections in Europe in particular suggest that growth at the beginning of 2021 could be lower than expected, there are a series of factors that have a positive influence on the risks for the baseline scenario. For example, there is further positive news on the production and distribution of COVID-19 vaccines as well as the development and efficacy of medicinal therapies. Away from the pandemic, a key risk (“No-Deal Brexit”) has also been eliminated with the successful conclusion of a trade and cooperation agreement between the European Union and the United Kingdom. 1
PROSPECTS ON SALES MARKETS
The firefighting industry follows economic developments with a gap of one to two years. Demand is largely defined by countries with steady procurement. However, elevated safety awareness following natural disasters also leads to increased investment in firefighting technology and equipment.
In 2021, the global firefighting industry is expected to hold steady. Whether the individual countries opt for programs of investment or cost-cutting programs in tackling the economic effects of the COVID-19 pandemic will be the decisive factor. Both will be discussed at a national level.
The North American market has made a very promising start to the new year. After a fall in volume to around 4,000 delivered vehicles in the year under review, demand is expected to stabilize in 2021. Large municipal budgets will be reviewed as a consequence of the COVID-19 pandemic. How quickly the stimulus packages of the new US administration under President Joe Biden and the announced investment in infrastructure take effect will be key.
Europe’s firefighting market should continue to grow in 2021. Demand mainly comes from the D-A-CH region (Germany, Austria, Switzerland) and some Western European countries, in which there are regular replacements. The project landscape continues to look very healthy. Financing from the public purse is assured despite a severe economic slump. Private financial contributions to the fire service organizations, on the other hand, have fallen in many places due to the restrictions implemented to tackle the pandemic, thus delaying the acquisition of firefighting equipment.
On the Asian firefighting markets, there should be a slight recovery in 2021 after a fall in the reporting year. However, it will be some time until the familiar volumes are reached again. The reasons for that are COVID-19, which broke out in Asia in late 2019, and the early, strict lockdowns in the region. Another factor is the trade dispute between the USA and China. Demand in Russia remains geared towards simple products due to tight budgets, while the economic problems in Turkey have worsened.
The countries of the Middle East have started the new year with higher demand. As a result, slight market growth is expected in 2021. The reasons behind this are the trend reversal in the development of the price of oil and the easing of political tension between Saudi Arabia and Qatar.
Revenues and result of operations
Even though uncertainty remains high as a result of the COVID-19 pandemic, the global firefighting industry can be expected to hold steady in 2021 based on global economic forecasts and the company’s own industry observations. With its wide diversification in terms of products and markets, industrial production methods, technological leadership and financial strength, Rosenbauer is well positioned to balance out risks and seize opportunities for the long-term growth of the Group. The efficiency-enhancing measures will be continued, and the necessary operating capital is to be reduced in particular.
Based on a solid order book, the Executive Board expects the company to achieve stable revenues and, once again, an EBIT margin of around 5% in 2021. Possible disruptions to business as a result of the COVID-19 pandemic do not permit a more precise forecast at the current time.
1 IMF, World Economic Outlook, Update, January 20, 2021.