Heatrae Sadia comment: Q1 2017
Paul Rivett, Managing Director Heatrae Sadia is BMBI’s Expert for Water Heating.
Quarter 1 sales in the hot water sector were mixed. Domestic unvented cylinders slipped 10% on the same period last year, hit by slower private housing starts and the growth of combi boilers in small to medium size houses.
Stronger sales of combis benefit developers in the short term, but expose them to customer complaints in winter. Combis struggle to provide enough hot water in colder mains water conditions, particularly if there’s more than one wet room.
Sales of electric storage water heaters are flat and in line with last year. However, new commercial products, updated for ErP (Energy Rated Products) compliance with new features such as BMS connectivity, pasteurisation cycle to prevent Legionella and smart heating controls are doing well. ErP is a European Union (EU) directive to improve energy efficiency and performance standards of products. It comprises two directives, Ecodesign and Energy Labelling, to help achieve the 20-20-20 target of reducing energy use by 20% and increase the share of renewable energies by 20% by 2020.
Drinking water, particularly hot tap dispensers are growing at a fast rate due to market expansion in both commercial and domestic sectors.
Electric boilers continue to grow despite lower oil prices in off-gas areas, as gas boilers in flats and apartments are replaced to comply with gas boiler and flue regulations. This is a trend that we expect will accelerate.
As we enter Quarter 2 with cautious optimism, the General Election, an increased squeeze on consumer spending and the disconcerting protracted two year BREXIT negotiations could sap confidence. But uncertainty is becoming the backdrop to personal and business decisions, and people can become used to anything. After a dip in spending and confidence at the start of the year consumers seem to have started spending again. GfK’s Consumer Confidence Index reports that although the Overall Index Score remains in negative territory, and dipped in April, consumers are positive about their personal finances and say now is a good time to buy. Their confidence may be short lived, but we are entering new territory here!
The late Easter will also impact year-on-year performance for the quarter, with benefits already reaped in Quarter 1.
