Challenging market conditions after the decline in global demand
The crisis, originated in the USA with the deterioration in the mortgage market towards the middle of 2007, has become a global phenomenon in 2008, and had its tall from all over the world as we entered 2009. Worsening by the distressed financial sector, the crisis caused rapid declines in global consumption, historical lows in consumer confidence indexes and record-high corporate bankruptcies.
The decline in the global demand initially had a detrimental effect on the manufacturers of industrial intermediate products and then, parallel to the decrease in their sales, on the consumer goods manufacturers suffered as well. Manufacturers of white goods were also affected by this economic downturn. Many companies experienced a drop in their sales on a year on year basis. In response to this recession, many governments initiated economic stimulus packages and tax deductions in order to boost demand in certain markets.
On the other hand, the decline in the global demand exacerbated a dramatic fall in commodity prices. This, in turn, has contributed to overall profitability in the sector, despite the decreasing demand.
Other remarkable developments in the white goods market were mainly characterized by continuing consolidation through mergers and acquisitions across different regions, as well as the cooperation among white goods manufacturers operating in the Chinese market.
Eastern Europe economies were worse hit by the crisis than the Western Europe. Core markets of Arçelik Group experienced a 4% drop in white goods sales in Western Europe and 25% in Eastern Europe in 2009.
Tax deductions applied pursuant to the stimulus package from the Turkish government reinvigorated the local demand which had declined sharply in the beginning of 2009, and slightly spurred the white goods market, thereby awakening the previously dormant demand.
However, the sales dropped immediately after the end of reduced special consumption tax rate, and the Turkish white goods market shrank for the first time in three years. According to data obtained from the White Goods Suppliers Association, total white goods sales in the local market dipped by 4.5% year in 2009.
Growth in consumer electronics
Despite the global crisis in 2009, the consumer electronics market maintained its growth with revenues rising by 4.3% to reach $724 billion. The LCD TV market also continued to improve rapidly in 2009 and grew by 37% to exceed 140 million pieces.
In the Western European market, a 17% rise in volume was experienced in LCD TV sales exceeding 38 million units. However, due to a rapid decline in LCD panel prices, total turnover remained flat at around $22 billion.
The transition to flat screen TVs in the market accelerated in Turkey during 2009. As the CRT television market shrank by 60%, the LCD television market grew by 36%. Unfortunately, this growth could not compensate for the downsizing in the total TV market. As a result of rapidly declining LCD panel prices and fierce competition, the sales volume in LCD TVs failed to bring a commensurate increase in value.
Koç Group Consumer Durables
Koç Group’s Consumer Durables companies retained their top position in the industry in 2009. Koç Group companies, which control Turkey’s largest sales and after-sales services networks, maintained their leadership position in white goods market with a share of over 50%. In addition to white goods, the Koç Consumer Durables companies are also dominating the television and air conditioner markets.
Besides being the undisputed leader in Turkey, Koç Group Consumer Durables companies rank as the 3rd largest manufacturers of white goods in Europe with production facilities in Turkey, Russia, Romania and China. Koç Group companies generated 46% of all white goods exports and 15% of all television exports from Turkey in 2009.