Industry-specific risks and opportunities
Competition risk remained largely unchanged compared with the previous year. Although the growing price competition for major projects involves uncertainties, the Wilo Group mainly mitigates these risks by making increased use of product lines with unique selling propositions. It also ensures a high level of competitive capability through its technological edge, particularly in the area of energy efficiency, and through its outstanding product quality and extensive global network. The occurrence of competition risks is possible. Wilo rates the risk of earnings effects for the Group that emerge from the competitive environment and differ from corporate planning as moderate (medium earnings impact according to risk classification).
Energy shortage and the Ecodesign Directive
The Ecodesign or Energy-related Products Directive sets the framework for defining uniform regulations on the environmentally sound design of energy-related products in the European Union (EU). The specific product requirements are stipulated in implementing measures for the individual product groups and enacted by regulations in the individual member states.
Regulation (EU) No 547/2012 stipulates the requirements for the environmentally sound design of water pumps. In contrast to the regulation on glandless circulation pumps, the efficiency of the pump section is the only determining factor. The relevant requirement is the minimum efficiency index (MEI), which may not be lower than 0.40. The reference MEI for water pumps with the highest efficiency is ≥ 0.70. Regulation (EU) No. 547/2012 is currently being revised by the European Commission with respect to an overall efficiency indicator. The Wilo Group expects this to result in more stringent requirements and an expanded scope of application in the medium term.
In addition, the drive part of water pumps are governed by Regulation (EC) No 640/2009, amended by Regulation (EU) No 4/2014, which defines minimum efficiency classes for motors. Motors with a rated output of between 7.5 kW and 375 kW have to comply with a minimum efficiency class of IE3, or IE2 if the motor is fitted with a frequency converter. From 1 January 2017, motors from 0.75 kW to 7.5 kW will also have to comply with these requirements.
The Wilo Group has been committed to energy-efficient products for many years, meaning that it was well positioned to adapt to these fundamental changes in legislation at an early stage. The Wilo Group’s high-efficiency pumps and particularly the products in the Wilo-Stratos GIGA and WiloHelix EXCEL series and the HighEfficiency Drive (HED) meet or even exceed the current strict requirements for the European single market. This gives the Wilo Group additional market opportunities in the Europe region. Tightened energy efficiency legislation in the EU often also serves as a beacon for markets outside Europe. However, it is presently hard to assess the extent to which the forecast positive effects will take hold in the expected period.
Technological progress in building management
Manufacturers and consumers are increasingly focusing on smart living. In smart homes, everyday devices and systems in private households are electronically integrated in order to combine higher energy efficiency with greater convenience, economic efficiency, flexibility and safety. The devices and systems are controlled and accessed centrally and also remotely. Smart homes offer additional growth opportunities for the Building Services market segment. The strategic investment, topped up in 2016, in iEXERGY GmbH, which focuses on the development of smart home solutions, gives the Wilo Group systems and solutions expertise in this area. The opportunities arising from this can positively influence the business activities of the Wilo Group in the medium to long term. It is currently still difficult to estimate the effects on earnings and liquidity, and they can therefore not yet be included in the specific earnings and financial planning of the Wilo Group.