Focus on the goods
E/D/E’s supplier and product group management is characterised by broad expertise in all product groups of the industrial B2B sector. In a process of interaction with other service areas, our product range specialists ensure that the products reach their target groups in the market – for the benefit of our members and contract suppliers.
Portfolio development: Outstanding performance in a dynamic market
- In the construction sector, E/D/E recorded a high level of orders from its members. Investments in energy efficiency measures are becoming more important.
- The industrial business developed in a stable manner. For energy-intensive industrial customers, the business is fraught with uncertainty.
- The retail sector started the financial year on a positive note, showing significant trading volume increases in the first half of 2022. From the summer onwards, the reluctance of private consumers to invest in this sector led to a decline in sales.
Growing together
The sharp rise in inflation as a result of the pressure felt from energy, food and commodity prices hit an economy in 2022 that was still struggling with the economic consequences of the Coronavirus pandemic. Despite difficult general operating conditions, supply bottlenecks, further rising prices and the war in Ukraine, the economic output in Germany increased. Growth in the period from July to September was primarily driven by private consumer spending, for example, on travel. Companies invested significantly more in equipment and machinery.
The largest increases in trading volume were recorded in the steel sector (+21.7 percent) and in construction-related product ranges (+7.3 percent). In total, a trading volume of around EUR 1.8 billion was achieved here. The trading volume in Germany and in Europe developed at approximately the same rate of around 4 percent. We achieved a trading volume of approx. EUR 2 billion outside Germany, corresponding to 20 percent of the overall trading volume.
In E/D/E, we also placed a special focus on the best possible availability of goods in 2022, and strengthened our position as a reliable supply partner. Thanks to the highly professional logistics at the eLC, our members had quick access to our inventories. The eLC’s warehouse turnover developed better than the volume in central payment in many product range areas. On balance, E/D/E recorded a warehouse turnover of around EUR 356 million, thus repeatedly achieving a new record.
In the area of supply networks/industrial services, 160 members benefited from our full-service offer in the year under review. Our members were able to win 25 large companies as new customers. With our MRO consulting, we are able to serve the constantly growing demands for supply concepts (consisting of product range and system concepts for process optimisation) across the entire value chain. In this way, we offer companies added value that gives our members a clear competitive advantage. Demand was particularly strong for consulting services on supply chain management, product range provisioning, process optimisation through systems and process consulting concepts. Increasingly, sustainability certification is a prerequisite for successful participation in the tendering business. With our ECO-Consulting, we supported our members in this certification with increasing intensity.
Economic climate in construction and industry cools down
In the construction and construction-related trades, demand among E/D/E members remained strong, particularly in the first half of the year, and was above the market level in each case. The most dynamic development was in the area of components. Growth impulses came primarily from energy-efficient construction measures and building in existing structures. The positive development in the fastening technology sector was characterised by price increases combined with high demand due to hoarding purchasing behaviour as a result of the Ukraine war. In the building hardware product area, the development was favoured by a high order backlog in the craft sector.
The tools segment developed positively: in hand tools, we recorded a trading volume slightly above the previous year, with the warehouse business developing disproportionately. Stable demand from the craft sector compensated for stagnating online trade due to reduced demand from private users. In the industry-related areas, the welding technology segment showed the strongest growth and was able to benefit from stable demand with simultaneously rising prices. In the business equipment segment, price increases and high demand – especially from craft sector business, also had a positive effect on business development.
The industrial business developed stably in 2022. The overall market for PPE and the technical trade recorded comparable demand compared to 2021 with rising prices and, as a result, significant growth in trade volumes. The members and suppliers within the association participated in this development, but the loss of business from pandemic supplies and a portfolio effect in supplier contracts put pressure on the development of trading volumes. With our professional inventory management approach, we remained a reliable partner even in this difficult operating environment. In the technical trade sector, we were even able to generate a record warehouse turnover of more than EUR 27 million in 2022. The decisive factors were increased stockpiling and the associated price effect.
In the building services sector, both the trade and the craft sector reduced their inventories from the fourth quarter onwards. For the full year 2022, however, WUPPER-RING recorded overall stable growth rates in turnover and sales. This is mainly due to a strong heating business, primarily because of the changes in the Climate Protection Act, as well as the new federal subsidy for efficient buildings (BEG). The uncertainty surrounding the natural gas supply as a result of the Ukraine war shifted the focus to heat generation with renewable energies. The European-oriented partner VGH International, which regulated more than EUR 1 billion with E/D/E for the second time, and the cooperation partner IGH also benefited from these developments. A decline in sales was recorded in the sanitary and installation sector. In particular, the declining willingness of consumers to invest in a tense overall economic environment, as well as the shortage of skilled workers in companies, constrained the development. At the same time, the trading volume – in view of significantly increased prices – was above the previous year’s level. In the course of the change in sales development, E/D/E’s turnover shifted from eLC warehousing to the area of central payment. It is important to actively embrace market developments and realise the underlying potential, especially in heating construction, in the coming years.
The steel division achieved double-digit growth in trading volumes. The Steel-Power service group in the ESH delivered a particularly strong result. Together, order quantities were able to be bundled here and purchasing advantages were achieved for all members. Within the E/D/E steel business, the sheet metal sector developed above average. The competencies in stainless steel/aluminium, bar steel, tubes and beams were expanded by new supply partners. By pooling forces and volumes, our members benefit from higher reimbursement rates and from price advantages in day-to-day business. With the expansion of discussion groups and joint activities, we are continuing to advance bundling of volumes. Our new SteelFocus service group will also make its contribution here in 2023.
Looking ahead
The market is expected to decline in 2023. The significant decline in new EFM construction indicates stagnation in the construction sector. Higher construction interest rates are also likely to have a negative impact on residential construction. Inflation increases the risk of orders being postponed or cancelled. Incoming orders in the construction industry are also expected to shrink. We expect further positive growth impulses from the renovation business, as well as from energy-efficient construction measures and building in existing structures. Here, the changes in climate policy and funding guidelines provide a boost. However, we expect significant declines in sales in the sanitary and installation sectors, especially among manufacturers of bathroom furniture and accessories. The volume of trade and turnover in PPE and the technical trade is also expected to decline. The outlook for the industrial economy remains subdued. In the coming months, slowly dwindling material bottlenecks could support the development. Nevertheless, the order situation is expected to decline, especially in the automotive and mechanical engineering sectors. The energy-intensive industries, in particular, continue to be under cost pressure, which could, however, have a positive effect on the demand for our services.
We expect that the industry will continue to be preoccupied with the issue of availability of goods in addition to the shortage of skilled workers. The resulting price increases for materials and transport are likely to dampen market sentiment. We will, therefore, push ahead and expand our eLC warehouse concept and full-range processing to ensure the desirable availability of goods for our members, and to provide qualified product and price data. We will also further strengthen the existing umbrella brands in 2023.
We want to significantly expand our customer base and supplier portfolio in building services and thus increase our market significance in Europe. Due to current market developments, we are planning to expand the heat pump business in the area of heat generation, and to offer our members a training offensive on the topic of “regenerative energies”.
Members and supply partners of the ESH estimate that sales development in the steel sector will decline in 2023. Added to this is a low steel price based on the year 2019. The price increase of energy and gas still has to be factored in here. Manufacturers are expected to cut production to stabilise factory prices. In this difficult environment, the “green steel” sector is steadily gaining in importance on the international market and thus also for us as a buying association.
We are continuing to expand our activities in the area of supply networks/industrial services across Europe in 2023. We want to continue to grow within MRO full supply. We are increasing the competitiveness of E/D/E members through (full-service) consulting projects and individual supply concepts for expanding system business with SMEs and large companies.
Creating sustainable and digital added value
In a challenging environment, the topic of digitalisation is once again gaining importance. This year, we will continue to focus on the digitalisation of all areas of business and activity. We continue to expand e-commerce and increase the reach of digital distribution channels. In addition, we continue to be a reliable partner for our members in the digitalisation of entire business models and processes, such as the establishment of BIM. Another key topic that will accompany us in the long term is sustainability. The demands from this area will grow increasingly. At E/D/E, we will assist our members as a strong partner and provide them with essential information and advice.