Tilecast News w/e 21 June 2024

[00:00:01] Speaker A: Tilecast news, features and analysis brought to. [00:00:04] Speaker B: You by Dari Vitaladict. Hi, and welcome to Tilecast's weekly news roundup with Joe Simpson. Hi, Joe. [00:00:24] Speaker C: Hi, Janet. [00:00:25] Speaker B: Before we start, I just want to remind listeners to hit, subscribe or follow so that they never miss an episode. This is the most important half hour of the week if you want to keep up to date with what's going down. The world of tiles. So, jo, we're going to start with some stats, I think. I gather the italian market has recently revealed its 2023 figures. [00:00:46] Speaker C: Yes. During the recent conferemica members meeting, Augusto Ciarocci was elected chairman until 2026, and they gave us an overview of what the latest figures are. In 2023, there were 125 tile manufacturers and they produced 373 million tiles. This is down 13, over 13% on 2022. The industry currently employs just under 18 and a half thousand employees, which is also slightly down. But the main news, which obviously isn't great news, is that total sales dropped nearly 18% to 369.2 million m². [00:01:28] Speaker B: That still sounds a lot. Is that still a lot? [00:01:30] Speaker C: Relatively speaking, I think it is still a lot. And the main thing, obviously, with Italy is that they still managed to maintain a pretty good average price. But the total revenues of the italian tile companies was about €6.2 billion last year, and that's 14% down on the previous year. And with 5 billion of that generated by exports, that was down 15.4%, but still represents about 82% of turnover. The good news is that the Italians carry on investing in the market. Investment in the sector rose 7.4% last year to just under 500 million pounds, or equivalent, of 7.7% of sales. So they are the. They remain optimistic, I think, about the future of tiles, as do we all, because it's still a very fast evolving sector. There are a lot of technical innovations improving products, and that's what the Italians are banking on for the future. [00:02:28] Speaker B: So does that also mean possibly that they are still profitable for what they are doing and they're reinvesting that profit rather than worrying about market share? [00:02:37] Speaker C: I think, yes, they've given up worrying about market share in terms of volume, because basically there is always a country, be that China, Turkey, wherever, Mexico, Brazil, who will undercut them on price. And that race to the bottom is a fool's errand, I think, as they understand. So continually investing in new designs, new technology, new production techniques, has always been their way. And it's the way that the best companies in Europe be that in Italy, Spain, Turkey, Germany, have always gone down that route, and they're going to have to go down that route because there is so much investment going on around the world. It's a truly global industry and they are fantastic factories being opened up right across the globe at the moment. [00:03:21] Speaker B: And I think there's particularly some investment going to Turkey at the moment. [00:03:25] Speaker C: Yeah, well, Turkey has got a relatively few large tile companies, but they are huge and they're investing lots of money. And the biggest of them, Calais ceramic, has just commenced production of a new factory which has opened up in Iraq, which kind of underlines that a lot of this is not just investment in your home market, but investment in foreign markets, just in the same way that Spain and Italy have been investing in Tennessee. But they have bought a just under 50% stake in al Sadaf porcelain in Iraq at the end of last year. And they're now going to roll out this new factory, which has an annual capacity of over two and a half million square meters. And it's producing large format porcelain tiles, 60 by 120, 60 by 60, primarily, which will be marketed in Iraq under the Kalibodur brand. So the general manager, Timur Karaoglu, has said that his aim is that the company is to add value to turkish ceramics and the ceramic industry and that they've always been active in foreign markets, exporting to 75 countries, and they aim to achieve further growth in the coming years. So it is an arms race. I mean, there are a lot of very well financed companies investing in tile production. So when we read about, you know, what's going on, and we have to remember that one thing that is going to happen is high quality tiles are going to be increasingly available around the globe. Cale have currently annual production of over 56 million. They expect that this new facility in Iraq will generate somewhere in the region of $15 million going forward. So it's significant in a market that you might not think is very big. Almost anywhere you look, there is potentially a very large tar market. [00:05:09] Speaker B: One example is the Middle Eastern tar market growing. [00:05:14] Speaker C: It is growing. It's growing for a number of reasons. One is it's always been a very good natural stone market. Quite frankly, there isn't enough large format, high quality natural stone being mined and processed to meet demand. And it's a hard surfaces market. And they're investing a lot in the kind of areas like shopping malls, hotels, transport hubs, the huge tile users. Plus there's obviously been quite a lot recently going into sports stadium and other big tile users. So it's growing in all the areas where tile has traditionally been strong. [00:05:48] Speaker B: Right, so was there some other news from Turkey that you were going to mention? [00:05:53] Speaker C: Yeah, they're not the only one. This is actual investment in Turkey itself. Ng Kutaya, which is one of Turkey's leading tile producers, has just launched a new production line in Kutaiya from which it takes its name on the anatolian peninsula. Not surprisingly, if there's one thing Italy are even better at than exporting tiles, it's exporting the kit that makes tiles. And this is a Sakme plant. And it's part of Kataya's bid to make itself one of the dominant players in the turkish tile sector. It has already has a production capacity of more than 54 million m² in tiles and slabs. And the aim is to develop top of the range products to export to Europe and America. And as an indication of how important this was, the inauguration ceremony was attended by the turkish prime minister, Recep Tayyip Erdogan. So, you know, this is something that the government is taking seriously, not just the tile industry. [00:06:49] Speaker B: Okay. And so to the UK, because we're in the UK at the moment, what's been happening there? [00:06:55] Speaker C: Well, this week, the big bit of news for me was that Tile Mountain has just opened its largest ever showroom. For those of you who don't know, Tile Mountain is the UK's leading online tile retailer. But it's also now increasingly in the bricks and mortar tile retailing space. And its 8th store in Milton Keynes is the largest it's ever opened, at some 20,000 sqft. But interestingly, it is called Tarland Bathroom Mountain and it aims to be a one stop shop for all the homeowners tiling and bathroom needs. Tar Mountain, obviously, have got a fantastic management team behind them. It was founded by Mo Iqbal and the managing director, Jeremy Harris. And the rest of the team have got a fantastic track record. And Harris said of this new showroom, this contemporary space reflects our commitment to innovation, quality and customer satisfaction, where people can experience our extensive range of bathroom and tile products in a setting designed to inspire and excite, which pretty much says it all. It's interesting that. That now, with Milton Keynes joining a set of seven sites that includes Basildon, Birmingham, Liverpool, Nottingham, Stockport, Stockton on Tees and Stoke on Trent, they've got some. They've basically covered the whole of the. Of England in strategic locations. Plus they've got an absolutely huge warehouse, 120,000 square foot in stoke on Trent, and that has over 100,000 stock available and they're selling everything from classic or contemporary to large format tiles. They're a very, very serious player in the UK market and in some ways, leading the whole world in online tile retailing. [00:08:39] Speaker B: So online tile retailing is a big chunk of what they do as well as the showrooms? [00:08:43] Speaker C: Oh, yeah. I mean, they started entirely online, but it's interesting that they are now getting a larger bricks and mortar presence and, you know, they've got so much expertise there, they're not a company you want to bet against. [00:08:57] Speaker B: And I guess the fact is that really, most people want to see tiles online. Doesn't quite do them justice, does it? [00:09:05] Speaker C: Well, I think it's done a lot better than a lot of people thought, and that's largely because companies like Tile Mountain have got very slick sample surfaces. But, you know, there are still people who don't really have the visual imagination to go from a single sample of a tile to a complete bathroom or a complete kitchen or a hallway or an outdoor barbecue area and want to see room sets, want to see larger arrays of tiles, want to see different tiles working together. So I think they're trying to be all things to all men and quite likely to pull it off. [00:09:36] Speaker B: And so what about other UK retailers? Is anyone else doing anything interesting? [00:09:41] Speaker C: Well, yeah. The big news this week was that Victoria Plc, the international manufacturer and distributor of flooring, have just announced their results for the year ending the 30 March. And it's a bit of a mixed bag. Their revenues fell to 1.25 billion from 1.46 billion in 2023, with underlying profits down from 71.3 million to 27.1. So not great. But then we all know it's been a pretty awful market. But I think most significantly for Victoria Group, the tar sector has been performing pretty sluggishly. Its production volumes fell 19%, from 53.9 million to 43.6 million. The tile revenue was down 22.6%, from 453 million pounds to 350.9 million pounds, with earnings EBIT earnings down nearly 59%, from 77.5 million pounds to 31.8 million pounds. So not great. [00:10:48] Speaker B: A lot of numbers to get your head around there. [00:10:50] Speaker C: There are a lot of numbers to get your head around. But the summary from Geoff Wilding, the executive chairman, was slightly more upbeat. He said as interest rates fall, housing transactions and deferred residential renovation, improvement and repair purchases will rebound, driving flooring demand. We expect the market outperformance and productivity improvements secured over the last 24 months to then be rapidly reflected in Victoria's earnings and cash flow. Until this occurs, we remain focused on minimizing controllable costs and driving market share gains. So basically, they're going to steer their ship as well as they can. The market's not great, but they think they can bounce back. Another thing I think they're going to be betting on is that the american anti tariff measures against indian tiles might inspire the EU to take stronger action against India and maybe China, and that that will help the european producers to regain market share. Victoria is currently in the process of integrating its production across its main ceramic businesses, which include Caribben. And it's also changing the brand focus at Celoni to on high end commercial applications. Have to remember, victoria bet a lot of money on the tile sector. I mean, they own Ibero, Caraben, Ascot, Casabella, Casa, Infinita, Capri Ceramica, Collie, Metropole, Celoni ceramic, Sierra ceradom and Valle lunga. So they've got a lot of tile brands in their portfolio now, over what. [00:12:21] Speaker B: Period of time they've been buying those up. [00:12:25] Speaker C: It's all happened relatively recently in the past decade, but they've now got, you know, they're not just playing at this market, they're serious players and they've invested a lot in Spain and Italy, primarily, and they're, you know, big brands in Spain and they. There's a certain amount of synergy still needs to be found. They've got to rationalize a lot of it. I mean, from an outsider's point of view, it looks like they've got quite a lot of brands in a similar design space, but. So they're going to have to work these kind of nuances out as they go forward. But they have been a very successful company over a long period of time and they have got a big war chest. So I think that the main opportunity for them is rebranding, repositioning, adding clarity to the market, and then we'll see. [00:13:11] Speaker B: Last week, you mentioned that sustainability initiatives had been sort of gaining a hold, and I gather nearlith have made an announcement recently which fits in with that. [00:13:21] Speaker C: Yeah, that's right. I mean, I think we've moved beyond the area where sustainability was purely a kind of marketing greenwashing gimmick. And now there's a lot more concrete steps being taken by companies. And some are concentrating on energy generation, some are concentrating on recycled content, some are concentrating on better routes to market, fewer tile miles, improved packaging. But Neolith, who are the spanish based manufacturer known for its stone worktops, is addressing one of the other big sustainability issues particularly keenly felt in Australia, which is silicosis. So basically, the silicon dust that's released into the air with dry cutting of materials, which has led to a pretty damaging class action there and some huge moves by government to ban certain products or whatever, and they're taking that face on. You have to remember, Neolith are very much a global brand. By next year, they will have 25 distribution centres around the world as they're opening or refurbishing three new ones in Gothenburg in Sweden, Los Angeles in the USA, in Auckland and New Zealand. So they tend to take quite a long term marketing led view. And what they're doing is launching a silica free worktop offering called Neolith for a new era, which. And they're going to introduce it, not surprisingly, first in Australia and then rolling it out globally. The chief executive, Jesus Iaza, said these new crystalline silica free products have the same technical characteristics our customers so adore. We truly believe marble workers and installers will be impressed by how you can work with them. We can already clearly see that there will be a period of conversion between materials such as compact quartz, which have been on the market for years and are losing in market share to technically superior to products like Neolith. But he is also quite realistic. He said 2023 was a year in which we found ourselves up against major challenges, since the overall demand for construction materials had dropped in many markets. For 2024, we want to be ambitious and moderately optimistic, and basically, that is the current state of the Talmud market. In a nutshell. [00:15:38] Speaker B: Everyone's saying the same thing, aren't they? It was bad, but it's getting better. [00:15:41] Speaker C: It's tough out there, but when the going gets tough, the tough get going, as they say, or don't. But, you know, that is. That is what you're seeing. The. You can sit on your hands and cry into your beer or do whatever you want to do, but basically there is still a market out there. It will rebound once we got over this whole series of elections. And then whoever is in power in America, the UK, elsewhere, the tile market will come back. It's still a fantastic product. Innovation and aesthetic beauty are more common than ever. So, you know, the best companies are going to succeed. [00:16:19] Speaker B: And for next week, then, I gather you're going to be making most of the news next week. Joe, what's going on? [00:16:25] Speaker C: Absolutely. Yeah, I know. Tarl addicts. It's going to be a big week in tile addicts life. We're heading up to the NEC in Birmingham, which is the UK's premier exhibition centre, and we're going to be curating a set of different tile and worktop surfaces in a feature within the installer show called Surface Area. I'm really excited about this. I've put together what I think are both a cross section of small formats, large formats, three D and flat tiles, really advanced tiles and very traditional tiles, all designed to have something very cutting edge to show to people. I'm going to be sharing this space with Jane Addis, who is the former new product and design director at original style. And basically we're going to talk people through all the tiles that are on display so you can come and see everything from a thermoform shower tray to a extruded small format tile with reactive glazes on it. We've got the products that just won the Alfa Doro and that's the plan. Now of course everything could still go belly up because we are now discovering. I mean, I knew there were problems post Brexit getting things around, but boy, I had no idea just how hard it was to get just tile samples through customs. So at the moment we've got a whole load of stuff stuck in TNT warehouses and around the country. I'm hoping they're all going to get to the NEC on time, but it's unbelievably difficult and my heart goes out to anybody who is trying to do this week in, week out. This has been a one off for me and it's been a complete nightmare. So having to deal with this every week must be dreadful. But hey ho, I know there are some things are here because people have sent me pictures of them. So come along to the NEC next week and have a chat. [00:18:13] Speaker B: Great stuff. We'll look forward to hearing how that goes and any other news that comes in. Meanwhile during the week and if you do have anything you want to let us know about, then do send emails to Joe. What's the best email address? [00:18:27] Speaker C: Right? Yeah, absolutely. I think email is the way to go. And it's tile UK, tileuk.com. send it through, we'll have a look, we'll follow up what we need to follow up. And you'll be appearing in tilecast soon hopefully. [00:18:44] Speaker B: If it's a good story. I mean, you know, we can't put everything everybody ever sends us because obviously we'd be here for days. But Joe does have a very good idea of what is news. He's been around for a long time doing this. Put everything in context. So yeah, look forward to seeing you next week. [00:19:01] Speaker C: Yeah. Okay, well, hope you see as many of you as possible at the NEC. So it's the 25th to the 27 June Birmingham. [00:19:08] Speaker B: Great stuff. See you then. [00:19:10] Speaker C: Bye. [00:19:11] Speaker A: You've been listening to Tilecast, produced by diary of a tile addict. To ensure you don't miss any future episodes, don't forget to follow us. You can also find show notes and receive updates on newsfeeds, articles, podcasts and videos direct to your inbox by subscribing to the Diaryofataladdict.com website. Get the inside track a diary of a tile addiction.