2022 Outlook
The global economy started 2022 weaker than expected. Faced with the rapid spread of the new COVID-19 Omicron variant, many countries have reintroduced mobility restrictions. Rising energy prices, along with supply chain disruptions, have led to higher and broad-based inflation, particularly in the US and in many emerging markets and developing countries. Continued spending cuts in China’s real estate sector and slower private consumption recovery are further limiting growth prospects.
In the current year, the IMF therefore calculates that global economic growth will slow from the recent 5.9% to 4.4%.1 This figure is half a percentage point below the forecast made last October and reflects the downgrading of the largest economies. For example, the forecast for the US was revised down by 1.2 percentage points due to the earlier termination of accommodative monetary policy by the Federal Reserve and ongoing supply chain issues, and the outlook for China was revised down by 0.8 percentage points due to the disruptions caused by the zero-tolerance policy in pandemic response and protracted financial pressures among real estate developers. At the same time, higher inflation will persist for longer due to supply chain disruptions and high energy prices.
The risks in this scenario are obvious: the emergence of additional COVID-19 variants could prolong the pandemic and cause renewed economic disruptions. In addition, supply chain problems, volatile energy prices, and local wage pressures imply uncertainty for inflation and policy decisions. As developed economies raise key interest rates, new threats to financial stability and capital flows to emerging markets and developing countries, their currencies, and financial positions could emerge. Additional global risks could arise from ongoing geopolitical tensions and global warming.
Russia’s invasion of Ukraine led to economic uncertainties and volatile financial markets worldwide. While stock markets faced declines, prices for gold, oil, and commodities such as aluminum skyrocketed. The long-term impact on economies and their growth cannot be estimated at the time this report was prepared.
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 2022, growth should again be possible for the global firefighting industry. Particularly in the developed economies, the willingness to invest appears to be unbroken despite the COVID-19 pandemic, and the corresponding budget resources for preventive firefighting and disaster protection technology will continue to be made available. The decisive factor will be how long the supply chain disruptions continue to impact production. The same applies to the pandemic-related mobility restrictions.
The North American market has started the new year with very dynamic demand, mainly attributable to extensive funding programs for emergency response and electric mobility, which also benefit fire departments. The ongoing supply chain disruptions and feared longer waiting times are also causing many emergency services to bring forward their procurements. At the same time, the good economic situation has tightened the supply of skilled labor.
Europe’s firefighting market should continue its solid development in 2022. At the start of the third pandemic year, the willingness of the public sector to invest appears high and preventive firefighting and disaster protection technology can draw on substantial financial resources. Private financial contributions to fire service organizations continue to flow slowly due to pandemic constraints. Demand is being driven primarily by central, eastern and northern European countries.
The weak state of the sector on the Asian firefighting markets will improve only slightly in the current year. Market volumes will continue to fall well short of the usual levels. There are many reasons for this. In addition to the negative impact of the COVID-19 pandemic, individual countries in the region are experiencing prolonged economic problems and, in some cases, international sanctions. The trade dispute between China and the US is also having a negative impact. Low vaccination rates continue to encourage new outbreaks of the coronavirus and lead to local lockdowns.
The countries of the Middle East have started the new year with comparatively lower demand. Demand from airports in particular is currently low, but the public sector is increasingly reactivating planned tenders. At the time of reporting, the global economy was facing extreme fluctuations in the price of oil. Depending on further developments over the course of the year, there could be new potential for sales of Rosenbauer products.
Revenues and result of operations
Even though uncertainty remains high as a result of the COVID-19, the global firefighting industry is expected to grow again in 2022 based on global economic forecasts and our 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. Measures to increase efficiency are to be stepped up once again in the current year.
Based on a solid order book, the Executive Board expects revenues to exceed € 1 billion in 2022. The EBIT margin is expected to be level with the prior year despite continuing supply chain disruptions and uncertainty caused by the COVID-19 pandemic.
1 Aufgrund des Krieges in der Ukraine zum Zeitpunkt der Berichtslegung sind die globalen Auswirkungen nicht abschätzbar. Das nächste IWF-Update erscheint am 19. April 2022.