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Global Elevator & Escalator Market

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Global Elevator & Escalator Market

  1. 1. Global Elevator & Escalator market Overview Sources: IMF, UNCTAD, Credit Suisse Research, Estimates Usage Residential Commercial Industrial Revenue Stream New Equipment Maintenance Modernization • An escalator is a moving platform or staircase for transit of people and goods between sort distances. • An elevator or lift is a vertical moving transit vessel for transportation of people or goods between different floors of the building • Escalator and Elevators generally work on electricity and are used in almost all countries globally. • Residential apartments, commercial building like offices and shopping centers, public transit facilities, industrial compounds are some of the common usage point for escalators and elevators. • In terms of overall market by value, elevators are estimated to contribute 95% of the total value of the combined market for moving products • Escalators and elevators have a shelf life of 10-20 years depending upon usage and has different stages during its life-cycle. • The long life cycle in itself creates business for manufacturers at different stages of product life cycle. • Typically, the lag between new equipment purchase and start of maintenance and servicing is 18-36 months. • According to estimates, e&e business segment recorded total revenue of USD 45 billion in 2010 with 51% contribution from new equipment sales and 35 and 9 percent contribution from maintenance and modernization of existing escalators and elevators.
  2. 2. • The Global Elevator and escalator market is estimated at USD 63.9 billion in revenues in 2015, a growth of 1.2 percent from USD 63.2 billion in 2014. • The new equipment market is estimated to have declined by 2.3 percent to USD 33.7 billion in 2015 due to slowdown in China, which contributes almost 53 percent to new equipment sales in 2014. Chinese E&E market estimated at USD 9 billion in 2015. • However, maintenance and servicing market continued to expand with an estimated growth of 5 percent to USD 22.3 billion in 2015. Maintenance market is now estimated to contribute about 35 percent to the total revenues. • Over the long term, Chinese market grew at a CAGR of 15 percent between 2005-15 , followed by strong growth in APAC and MENA region. Global E & E market reaches USD 64 billion in 2015, China leads with a CAGR of 15% during 2005-15 Sources: IMF, UNCTAD, Credit Suisse Research, Estimates 0% 2% 4% 6% 8% 10% 12% 14% 0% 2% 4% 6% 8% 10% 12% 14% 16% Europe Japan & Korea North America CIS MENA South America Sub Saharan Africa APAC China 17.5 22.5 33.7 8.9 15.2 22.3 2.8 6.1 8.0 29.2 43.8 2005 2010 2015E New Equipment Maintenance ModernizationIn USD Billion Global E&E market segments Global E&E major markets (2015E) 63.9 Vertical Axis : Construction GDP growth CAGR(2005-2015E) Horizontal axis : E&E gowth CAGR(2005-15E) Size of the bubble represents size of the e&e market in USD Billion
  3. 3. • The new equipment sales is estimated to have declined by 1 percent to 717 thousand units in 2015. However the market is estimated to have increased by a CAGR of 7 percent between 2005-2015. • Chinese market is expected to have recorded a slower growth in 2015 due to decline in upcoming real estate projects. However, Chinese market have expanded from 30 percent of total market size in 2005 to 53 percent of total e&e market by 2015. • The slowdown in growth is expected to be coupled with drop in average selling prices of the equipment. New equipment prices are estimated to have dropped by 2 percent in 2015. • However drop in prices would not have much impact due to reduction in commodity prices which comprises the majority of the input costs for the industry. China slows, but continues to use above 50% of the global new equipment manufactured, cussions global growth rate during turbulent times. Sources: IMF, UNCTAD, Credit Suisse Research, Estimates 30% 20% 14% 6% 17% 5% 5% 53% 12% 14% 8% 4% 3% China North America APAC MENA Europe Japan & Korea CIS South America Sub Saharan Africa 375,000 510,000 570,000 727,864 716,946 6% -6% 6% 3% -1% 2005 2008 2010 2014 2015E New Equipment Growth Cagr (%) New Equipment sales and growth rate CAGR Region wise new equipment sales split 2015E :717,000 2005 : 375,000 In USD Billion
  4. 4. Growth in maintenance income relatively more stable. Pressure on servicing charges due to local competition. Sources: IMF, UNCTAD, Credit Suisse Research, Estimates New Equipment MaintenanceModernization Full Replacement 9.0 10.1 11.6 13.1 2005 2008 2012 2015E MaintenanceIn Million units Elevator & Escalator’s Life Cycle Global count of Installed machineries • The total market size of service and maintenance of escalators and elevators is estimated to have increase by 5 percent in 2015 to reach USD 22 billion. • The total installed machines is estimated at 13 million units. Although the average cost of servicing an equipment has been sluggish between USD 2200 and 2500 per annum, it still provides a cushion to the companies when new equipment sales declines. • Maintenance sector contribution to the overall elevator and escalator industry revenue has increased at a rapid pace during 2010-15 growing from 32% to 35%. Regional players have showed a better growth in comparison to industry average. • Over a short to medium term, the deferment of replacement demand in developed markets is likely to keep the segments growth stable due to continuous requirement of maintenance of aging equipment.
  5. 5. SWOT :Opportunities outweighs Weakness Sources: Wikipedia Increasing residential demand backed by increasing urbanization Continuous Business Opportunity in the form of maintenance and servicing contract Increasing per capita income along with increasing technological advancement Increase of automation in goods movement within the Industry Shortage of skilled labour for after sales service and maintenance Pricing pressure due to fragmented nature of Industry. Cyclical nature with generally low growth rate Capital intensive business with longer gestation period. Expansion in untapped market with lower urbanization rate. Possibility of Inorganic expansion due to large number of small regional players in a low margin business Government focus on increasing infrastructure spending in emerging economies Investment on research and development in energy efficient and green technologies Price sensitive market with regional local players undercutting prices to increase volume Economic slowdown can push the growth rate down, prolonged slowdown hurts new additions Regulatory and safety issues in some regions Lack of investment into skill training due to eroding margins in maintenance business Strength Weakness Opportunity Threat
  6. 6. China along with Asia Pacific & MENA region expected to drive demand; Europe to continue underperforming on commercial and industrial front. Sources: IMF, UNCTAD, Credit Suisse Research, Estimates • Emerging economies with increasing per capita income is a growth opportunity • Large housing deficit a major driver, with oil prices at low, government spending on housing a positive Residential Demand • Increase in services sector at cost efficient locations are demand driver for certain emerging countries. • Urbanization rate is expected to increase at a CAGR of 3-10% in medium terms for developing countries Commercial Demand • The Industry demand is expected to be low due to global reduction of capex, amidst declining margins in commodity business. Industrial Demand Positive impact: • Asia pacific • China • South America • North America Positive impact: China MENA Negative impact: Europe Negative impact: China MENA South America Europe
  7. 7. Global E&E market to grow at 6 percent CAGR between 2015-2020. China, Asia Pacific expected to outperform global growth. Europe, MENA and Japan laggards. 34.4 33.7 34.0 35.3 36.8 38.6 40.5 7.9 8.0 8.1 8.7 9.5 10.5 10.9 20.8 22.3 23.7 25.9 28.7 32.5 34.5 2014 2015E 2016E 2017E 2018E 2019E 2020E New Equipment Modernization MaintenanceIn USD Billion 9.5 9.0 8.6 9.6 10.5 11.8 12.5 11.4 12.8 13.2 14.0 15.0 16.0 17.2 6.0 5.9 5.8 6.0 6.7 7.3 7.7 4.0 4.7 5.5 6.3 6.8 7.6 8.1 8.8 8.8 8.9 9.4 10.0 10.6 11.2 7.9 7.8 7.8 8.1 8.4 8.9 9.1 5.1 5.2 5.5 5.9 6.5 7.2 7.3 9.1 8.3 8.4 8.4 9.0 9.9 10.5 1.6 1.7 2.0 2.2 2.2 2.4 2.7 2014 2015E 2016E 2017E 2018E 2019E 2020E China North America Europe APAC MENA Japan & Korea South America Cis Sub saharan Africa In USD Billion Sources: IMF, UNCTAD, Credit Suisse Research, Estimates E&E market size (2014-2020E) Segment wise revenue (2014-2020E) 63 66 70 75 82 86 64 • The global Elevator and escalator market is estimated to grow at a CAGR of 6 percent between 2015-2020 to USD 86 billion dollar. • Chinese E&E market is expected to grow at a CAGR of 7 percent between 2015-2020. Asia ex china market expected to grow at a CAGR of 10 percent. • Maintenance market is estimated to further move up at a CAGR of 9 percent due to slow movement of replacement cycle. • Maintenance contribution to overall market size expected to grow to 40 percent of total revenue of escalator and elevator industry.