Outlook 2024
Overall economic development1,2
At the beginning of the year, the International Monetary Fund (IMF) slightly raised its forecast for global economic growth in 2024. It now expects growth of 3.1% instead of the previous 2.9%. This figure is therefore exactly the same as the previous year. The reasons for this increase are the resilience of the US economy and some emerging and developing countries, which is above expectations, as well as the tax incentives in China. A further marginal improvement in the economy is expected for 2025. Global inflation is expected to drop from 6.8% to 5.8% this year.
This forecast is based on the assumption that prices for fuels and other commodities will fall in 2024 and 2025, as will key interest rates in the major economies. The price of oil is expected to fall by 2.4% on average in 2024, while other commodities are expected to become 0.9% cheaper. According to the IMF, both the US Federal Reserve and the ECB will leave their key interest rates at their current levels until the second half of the year before they can be gradually lowered as inflation approaches the target values.
Declining inflation and continuous growth have reduced the likelihood of a hard economic landing. At the same time, the risks to global growth are largely balanced.
On the positive side, a faster decline in inflation could lead to a further improvement in financing conditions and a looser fiscal policy than necessary could result in temporarily stronger growth. Greater efforts for structural reforms could support productivity and have positive effects across borders. On the downside, new commodity price peaks due to geopolitical shocks and supply chain disruptions – such as continued attacks in the Red Sea – or more stubborn inflation could prolong tight monetary policy. Greater concerns about the Chinese real estate sector or a disruptive shift to tax hikes and spending cuts elsewhere could also trigger growth disappointments.
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. There are also currently signs that airports around the world are becoming more willing to invest again.
Although international supply chains have not yet returned to their usual stability, the global firefighting industry should be able to continue growing in 2024. Despite a weak economic environment, the public sector is continuously investing in the safety of people and infrastructure. A good portion of the revenue growth in the developed markets is also likely to come from the price measures taken by manufacturers in response to the occasionally significant increases in material costs.
After the record purchases of 2022, a consolidation phase is expected for the North American market. Accordingly, new vehicle purchases are expected to level off at a level of over 5,000 units per year, which would be well above the historical average. The North American market has started the 2024 financial year with stable demand. Many manufacturers have increased their offer prices in the face of rising costs, while delivery time is often more important than vehicle price in tenders. Dealer networks are undergoing a streamlining process, which is leading, in part, to larger dealer territories and also to the expansion of dealer portfolios to include additional brands. The trend towards electric mobility continues.
Europe’s firefighting market is expected to continue to grow from a high level in 2024. Despite last year’s price increases, demand for forest fire equipment and vehicles, for example, remains strong. Rather atypically for Europe, the airport business has also picked up again after years of investment restraint. Interest in firefighting vehicles with alternative drive systems continues to grow. The European Union’s New Growth Plan for the Western Balkans 2024–2027 with a volume of € 6 billion could provide additional market impetus in Eastern Europe.
The recovery of the heterogeneous Asian firefighting markets will continue in the current year. Demand for ARFF vehicles in particular is picking up and should stabilize at solid pre-COVID levels in the short term. At the same time, international competition is growing in this product segment, which has an initial advantage in tenders due to weaker domestic currencies. Some of the major markets in the region will remain inaccessible to exporters in the long term due to the tense geopolitical conditions. Stronger demand is expected for the countries of the Middle East in the current year in view of improved economic data. In the industrial and airport business in particular, a number of attractive projects are ready for decision following delays. In addition to local production, increasing attention is also being paid to alternative vehicle drives. Rosenbauer closely monitors the development of the different firefighting markets in order to exploit sales opportunities early on. Sales activities are then stepped up in the countries or regions where greater procurement volumes have been identified. At the end of the reporting period, the Group had a historically high order backlog of € 1,788.0 million (2022: € 1,469.7 million). This figure is higher than a year’s revenues, although the equipment products and service revenues included here have only partly been taken into account owing to the shorter delivery times and larger vehicle orders with delivery times of two to three years.
Revenues and result of operations
According to experts, the global economy will grow by 3.1% in 2024, a marginal improvement on the previous year. The most recent forecast adjustments focus primarily on the resilience of the US economy and some emerging and developing countries. At the same time, global inflation should fall significantly, which could lead to key interest rate cuts and an easing of financing conditions for companies.
The firefighting industry, whose order books are full to bursting, lags behind the economic cycle. While it is expected that demand will continue to increase in 2024, actual industry sales will depend on the further stabilization of international supply chains. Many manufacturers have passed on the recent cost increases in the form of price adjustments, which should have a positive impact on their earnings quality.
Following a record level of incoming orders in 2023, the Rosenbauer Group has started the current financial year with a solid order backlog well in excess of one year’s revenues. Based on a further stabilization of the supply chains, the Rosenbauer Group’s Executive Board expects revenues of around € 1.2 billion and an EBIT margin of around 5% for 2024.
1IMF, World Economic Outlook, Update, January 30, 2024.
2 World Bank, Global Economic Prospects, January 9, 2024.