Russian market of central air conditioning systems

To understand the situation on the Russian market of the central air conditioning and ventilation systems it is necessary, first of all, to understand the structure of the Russian market of real estate. It is quite clear from Figures 1 and 2.

What could we see? The rapid development of sales in 2005-2007 was caused by active construction of a classic commercial real estate: offices of class “A” and «B», shopping malls, modern logistics centers (warehouses of class “A”). Moreover, most of the projects were the investment ones, another word, realized on the borrowed funds. The financial crisis of 2008 dramatically changed the construction landscape in Russia. Cheap loans became unavailable, and because of it the amount of available funds declined sharply.

Starting from 2009, a sharp increase in the share of the construction objects with the state funding could be seen. In 2012, their combined share was 47% of the total square of the commissioned facilities, in 2013 the share could reach 50% (Figure 2). If it were not the target programs financed from the budget, the market would have been far from encouraging.

The best examples of such investments are: facilities for Universiade in Kazan, for the Shanghai Cooperation Organization (SCO) summit in Yekaterinburg, the APEC summit in Vladivostok, the Olympic facilities in Sochi; ahead is the preparation for the Football World Cup. Such projects, in particular, stimulate the construction and renovation of hotels, increase in the share of which is well seen from Figure 1-2.

In addition, there is a number of less covered by the press, but financially intensive projects for construction of medical facilities, sports and recreational facilities, including swimming pools and skating-rinks, construction and reconstruction of the infrastructure facilities such as airports, train stations, etc. In many Russian regions the facilities financed from the budget make up to 80% of the total construction of non-residential real estate.

Figure 1. Real estate, which requires the installation of central air conditioning and ventilation systems, in millions of sq. m

Source: Litvinchuk Marketing

Figure 2. The structure of the real estate, which requires the installation of central air conditioning and ventilation systems, %

Source: Litvinchuk Marketing

Realization of the construction projects with the budget financing has a number of important features. First, it is overpriced compared to the foreign projects of the same type because of some specifics of tendering in Russia, and also of additional cost of public funding of such facilities; second, a large proportion of Russian materials and equipment, first of all the ventilation systems; third, participation of foreign companies as manufacturers and co-investors.

The connection between sales of equipment of central air conditioning systems and the volume of construction works (represented in Figure 1) perfectly reflects Figure 3. It demonstrates the average number of air exchange and cooling capacity in W / m2, calculated as the sum of the capacity of all ventilation equipment and cooling capacity of cold sources: chillers, rooftops, CCU and VRF sold in Russia, divided by the commissioned area and volume (shown in the Figure 1).

Figure 3.

Source: Litvinchuk Marketing

It is clearly seen that the curves are smooth and lie in the zone of valid values (55-80 W / m2, the ventilation rate 2.3-3). The features of these curves can be easily explained. In particular, the peak of 2008 is the result of the fact that the equipment was already imported into Russia but the buildings for which it is intended, were not completed and were not included in the statistics. Respectively in 2009-2010, when the uncompleted buildings were commissioned, but some equipment was purchased for them in 2008, so the curves have a gap. In the future, the growth of these curves is inevitable and in the end they would go beyond the reasonable value because of the fact that the bulk of equipment will not be installed in new buildings and facilities, but will replace the obsolete equipment.

Figure 4.

Source: Litvinchuk Marketing

Figure 4 shows the development of the market of central air conditioning systems in 2005-2012. It is clearly seen that in 2009, the market experienced a 40% DROP in sales. The market volume restored in 2011, and in 2012 it exceeded its pre-crisis levels. However, the profitability of the market fell down substantially (due to increased share of the budget projects), and therefore the level of profits of many players are at the level of 2005-2006.

As far as the individual segments of market are concerned, the most capacious of them AHU is moving towards the sells of the more complex systems. The share of complex systems with recovery, moisture, etc., functions is been increasing. Thus, if in 2009 there was a sharp increase in the share of the Russian manufacturers of AHU, but by the end of 2011 many Russian factories reached the peak of productivity and therefore the time of implementation of orders suffered. As a result there was a stabilization of the share of the Russian players and increase of the share of imports. Now the leaders in sales are the top three: VTS, VEZA, Tekhnogrup (brands NED and Korf), followed by a more than two-fold margin are A-Clima and VKT. It is clearly seen that four out of five top brands are Russian. If to measure the success of sales in monetary terms, in the ranks of the Russian producers appears York, the only foreign manufacturer which has a production factory of AHU in Russia.

Interesting things happen in the market of chillers. The results of 2011 and especially the first half of 2012 shows a tendency of growing share of low-cost chillers made in Italy. The leading group of the first 6 months looks as follows (dealer price): Carrier -14,3%, York -9,8%, Aermec -9,4%, Clint – 7,9%, Clivet -7, 4%, Daikin – 5,9%, Trane – 5,0%, McQuay – 3,9%. It is worth noting the success of Daikin, which together with its subsidiary McQuay shares the second and the third place with York.

Finally, the trend of the fan-coil market is the same. Carrier still holds the first position gradually losing its share, and the increasing popularity of the Russian brands of fan-coils, made by OEM agreements at Chinese factories.

The material is prepared by the Association of Professionals in the Industry of Climate (APIC) and the marketing agency Litvinchuk Marketing