WEST EUROPEAN ELECTRICAL WHOLESALE Market Report 2005

SUMMARY

Established since 1989, AMA have researched and published a wide range of reports on building products and consumer durables in the UK, with a particular emphasis on electrical products and components markets. Report areas include Heating, Ventilation and Air Conditioning, Domestic Heating, Electrical Accessories, Kitchen Appliances, Generating Sets, Lighting, Security, Panel Builders, Bathrooms and Showers. Also published are a wide range of distribution reviews including Builders Merchants, Electrical Wholesalers and DIY Multiples.

This new report reviews the electrical wholesale markets in the following EU countries:

• France
• Germany
• Belgium
• Netherlands.

It provides a brief overview of the economic conditions in these countries, with particular reference to the construction market. The report presents an overview of the current structure of the electrical wholesale market in each country and describes the key players in the market. In addition, the report represents a companion to AMA Research's report on the 'UK Electrical Wholesale Market', the 8th edition of which was published in November 2004.

Information was gathered from a number of sources, including published information, government statistics, trade interviews and company literature. The aim of the report is to provide a broad review of the markets in France, Germany, Belgium and the Netherlands, analysing market structures, product mix, supply and distribution trends. Sources of further information are also included for reference purposes.

Following the introduction of the EURO and abolition of national currencies, there are already early signs of restructuring in the electrical products sector -- both in terms of product supply and distribution. This report assesses current trends in both supply and distribution, reviewing recent trends and potential areas of change in the future, particularly in relation to supply structure.

Throughout the report, figures are given for market size, recent trends/forecasts, product mix and market shares for leading suppliers. It is emphasised that these figures are estimates only and should be used as guidelines only. While there are a range of figures available on market sizes and product sales, there are no common methods of analysis or definition, which varies significantly between companies and countries. For example, product definitions will always vary, while some companies will include non-wholesaling activities within their sector figures, which can affect market data. Equally, currency conversion rates have also presented a problem, particularly with the switch to the Euro and the relative value of Sterling, which can affect comparisons between countries.

However, the objective of the report is to provide an overview of the electrical wholesale market in these countries as a basis for general assessment of market trends within the major markets.

This section provides a brief overview of the total electrical wholesale market within the European Union, identifying the relative shares of the major countries, together with broad comparisons of economies.

When measured in Euro terms, the UK economy has now become the 2nd largest in the EU, and the 4th largest in the world. The table illustrates the relative decline of Germany in recent years, though it should be emphasised the figures cover a re-unified Germany with lower per-capita incomes in the former Eastern states. Per capita incomes at PPS (Purchasing Performance Standards) are relatively even across the 3 countries, though unemployment and inflation levels are much lower in the UK. Unemployment and inflation levels remain low in the UK compared to both France and Germany, with levels relatively static in 2004/05 in France and Germany, though rising slightly in 2005 in the UK.

Each country report includes a brief review of recent key economic and construction data, highlighting the impact on the electrical products sector. Performances between countries have varied significantly in the 2003-05 period, with relatively strong growth in France, though Germany and the Netherlands have experienced a much tougher trading environment.

In terms of the overall electrical wholesalers market within the European Union countries (excluding recent estimates), there are various estimates of market size. Typical estimates are around €28-30 billion (Euros), equivalent to around £18-20 billion (Sterling).

The figures should be regarded as approximate guidelines and there can be substantial variations in estimates of market size/mix by country for several key reasons:-

• Variation in definitions of 'electrical wholesalers' -- some countries include TV/electrical appliance distributors, electronic components distributors etc.
• Range of products sold by 'electrical wholesalers' -- electrical appliances is a key sector of difference between countries within the overall distribution of electrical products.
• Variations in the relative significance of electrical wholesalers within the overall distribution of electrical products and role of competing channels.
• Some wholesaling companies include non-wholesaling activities within their operations.

Many observers would regard the above figures as high due to the inclusion of domestic appliances in many countries, with a more relevant estimate of around €25 billion for electrical accessories. The share for France, for example, appears very high in relation to the relative size of the construction market and includes a wide range of 'non-core' merchanting activities.

The EU electrical wholesaling market has been relatively flat in the 2002-05 period, reflecting contrasting performances in key markets. While there has been some growth in France, Spain, Ireland, UK and some Scandinavian markets, this has been offset by flat or declining sales in Germany, Italy, Netherlands etc. Conditions in Germany, in particular, have been very difficult due to slow economic growth and a continuing decline in construction activity, which has had a negative impact on the overall EU market in general. We estimate Germany's share of the market has declined over the last 3 years to a current estimated level of around 29%

Economic growth in 2001-03 in the Eurozone has been relatively low by international standards, though 2004 saw some improvement with GDP growth of 2.1%. This was primarily driven by Spain and France, with Germany, Netherlands and Italy below the average for the region.

Performance to date in 2005 indicates a slowdown, with current forecasts of GDP growth at around 1.3%. Again, Italy and Germany are expected to be below the Eurozone average, though growth in Germany is primarily export driven and, as a consequence, there is no anticipated improvement in the construction and electrical wholesaling sectors, in particular, at least in the short-medium term.As with most EU forecasts, the prospects for 2006 are' better', with current forecasts for GDP growth of around 2.0%, reflecting stronger performance in most key markets. However, rising oil prices have impacted on all countries in 2005 and it is difficult to forecast their impact on economies in 2006.

As with most EU forecasts, the prospects for 2006 are' better', with current forecasts for GDP growth of around 2.0%, reflecting stronger performance in most key markets. However, rising oil prices have impacted on all countries in 2005 and it is difficult to forecast their impact on economies in 2006.

The key issue is whether economic recovery in key European markets will feed through into a buoyant construction sector and a general recovery in the electrical wholesaling market in most EU markets. France, UK, Netherlands and Belgium are all expected to experience some growth, but prospects in Germany remain more uncertain, particularly in view of the recent outcome of the 2005 Election which has resulted in a coalition government with less commitment to reform than anticipated.

Analysis of the electrical wholesale markets in Germany, France, Belgium/Netherlands includes a review of the differences in structure of the respective countries, highlighting key market trends, major suppliers and distribution issues.

A key issue to emerge from the analysis is that there are 3 leading multi-national wholesale groups with a reasonably strong presence in several markets:

• Sonepar
• Rexel
• Hagemeyer

Sonepar and Rexel are both based in France with high market shares in their home market and a leading presence in other EU and international markets. Hagemeyer are based in the Netherlands, but have a strong presence in Germany and the UK. Other groups with wholesaling operations beyond their national base are Solar and CEF, but neither group have the international scale of operations of the leading 3 suppliers.

In most markets, buying groups are relatively strong and operate to protect and co-ordinate the interests of independents, but in general there is a trends towards further concentration of supply. The introduction of the Euro and emergence of large customer groups with Pan-European operations are just two factors encouraging the formation of international wholesalers capable of providing the level of pricing, service and support required.

Over the 2002-05 period, the supply of electrical accessories, components and appliances in Europe is becoming increasingly concentrated, with the development of pan-European suppliers in many sectors of the market.

Electrical accessories have traditionally been a fragmented market, but major groups have emerged as product specifications, standards and applications have become more harmonised over the last decade. This is also partly driven by the emerging threat of low-cost imports from China, which is driving down average prices in some sectors and markets, and consequently undermining growth prospects in value terms.

This report reviews the supply trends in each of the markets, illustrating the current position of the leading wholesalers and identifying areas of potential change in the future, while also reviewing key factors influencing product trends.

TABLE OF CONTENTS

1. INTRODUCTION AND MARKET OVERVIEW IX

FRANCE 1

• F2. SUMMARY 2
• F3. ECONOMIC AND SOCIAL BACKGROUND 3
  • F3.1 GENERAL 3
  • F3.2 DEMOGRAPHIC PROFILE 4
  • F3.3 ECONOMIC BACKGROUND 5
  • F3.4 CONSTRUCTION 9
  • F3.5 THE HOUSING MARKET 12
• F4. TRADING WITH FRANCE 13
  • F4.1 THE EURO 13
  • F4.2 INVOICING AND PAYMENT 13
  • F4.3 EU EXPORT DOCUMENTATION 13
  • F4.4 VAT 14
  • F4.5 LANGUAGE 14
  • F4.6 AGENTS OR LOCAL REPRESENTATION 14
  • F4.7 PRODUCT STANDARDS 15
  • F4.8 TRADE EXHIBITIONS 15
  • F4.9 TRADE MAGAZINE AND ASSOCIATION 15
• F5. ELECTRICAL WHOLESALERS MARKET IN FRANCE 16
  • F5.1 MARKET SIZE 16
  • F5.2 ELECTRICAL WHOLESALE MARKET STRUCTURE 19
  • F5.3 KEY COMPANIES 20
  • F5.4 KEY ISSUES 30
• F6. FUTURE PROSPECTS 32
• F7. SOURCES OF FURTHER INFORMATION 33

GERMANY 1

• G2. SUMMARY 2
• G3 ECONOMIC AND SOCIAL BACKGROUND 3
  • G3.1 GENERAL 3
  • G3.2 DEMOGRAPHIC PROFILE 5
  • G3.3 ECONOMIC BACKGROUND 6
  • G3.4 CONSTRUCTION 10
  • G3.5 THE HOUSING MARKET 14
• G4. TRADING WITH GERMANY 15
  • G4.1 THE EURO 15
  • G4.2 INVOICING AND PAYMENT 15
  • G4.3 EU EXPORT DOCUMENTATION 15
  • G4.4 PACKAGING 16
  • G4.5 VAT 16
  • G4.6 LANGUAGE 16
  • G4.7 AGENTS OR LOCAL REPRESENTATION 17
  • G4.8 TRADE EXHIBITIONS 17
  • G4.9 TRADE MAGAZINES AND ASSOCIATION 18
• G5. THE ELECTRICAL WHOLESALERS MARKET IN GERMANY 19
  • G5.1 MARKET SIZE 19
  • G5.2 ELECTRICAL WHOLESALE MARKET STRUCTURE 21
  • G5.3 KEY COMPANIES 22
  • G5.4 KEY ISSUES 35
• G6. FUTURE PROSPECTS 38
• G7. SOURCES OF FURTHER INFORMATION 40

BELGIUM 1

• B2. SUMMARY 2
• B3. ECONOMIC AND SOCIAL BACKGROUND 3
  • B3.1 GENERAL 3
  • B3.2 DEMOGRAPHIC PROFILE 4
  • B3.3 ECONOMIC BACKGROUND 5
  • B3.4 CONSTRUCTION 8
  • B3.5 THE HOUSING MARKET 10
• B4. TRADING WITH BELGIUM 12
  • B4.1 THE EURO 12
  • B4.2 INVOICING AND PAYMENT 12
  • B4.3 EU EXPORT DOCUMENTATION 12
  • B4.4 PACKAGING/RECYCLING 12
  • B4.5 VAT 12
  • B4.6 LANGUAGE 13
  • B4.7 AGENTS OR LOCAL REPRESENTATION 13
  • B4.8 TRADE EXHIBITIONS 13
  • B4.9 TRADE MAGAZINES AND ASSOCIATION 13
• B5. THE ELECTRICAL WHOLESALERS MARKET IN BELGIUM 14
  • B5.1 MARKET SIZE 14
  • B5.2 ELECTRICAL WHOLESALE MARKET SIZE 15
  • B5.3 KEY COMPANIES 16
  • B5.4 KEY ISSUES 25
• B6. FUTURE PROSPECTS 28
• B7. SOURCES OF FURTHER INFORMATION 29

THE NETHERLANDS 1

• N2. SUMMARY 2
• N3. ECONOMIC AND SOCIAL BACKGROUND 3
  • N3.1 GENERAL 3
  • N3.2 DEMOGRAPHIC PROFILE 5
  • N3.3 ECONOMIC BACKGROUND 6
  • N3.4 CONSTRUCTION 8
  • N3.5 VALUE OF CONSTRUCTION OF BUILDINGS - SPLIT BY TYPE 9
• N4. TRADING WITH NETHERLANDS 17
  • N4.1 THE EURO 17
  • N4.2 EU EXPORT DOCUMENTATION 17
  • N4.3 VAT 17
  • N4.4 LANGUAGE 18
  • N4.5 AGENTS OR LOCAL REPRESENTATION 18
  • N4.6 TRADE EXHIBITIONS 18
  • N4.7 TRADE MAGAZINES AND ASSOCIATION 18
• N5. THE ELECTRICAL WHOLESALERS MARKET IN THE NETHERLANDS 19
  • N5.1 MARKET OVERVIEW 19
  • N5.2 ELECTRICAL WHOLESALE MARKET STRUCTURE 21
  • N5.3 KEY COMPANIES 22
  • N5.4 KEY ISSUES 33
• N6. FUTURE PROSPECTS 35
• N7. SOURCES OF FURTHER INFORMATION 37

TABLES AND CHARTS

• TABLE I COMPARISON OF KEY ECONOMIC INDICATORS - FRANCE, GERMANY & UK - 2004 X
• CHART II EUROPEAN UNION - ELECTRICAL WHOLESALE MARKET - BY MAJOR COUNTRY 2005 XI
• TABLE F1 MAJOR CENTRES IN FRANCE 3
• TABLE F2 POPULATION OF FRANCE BY AGE 4
• CHART F3 POPULATION DEVELOPMENT 1962-2004 PROPORTION IN AGE GROUPS 5
• TABLE F4 GDP AT MARKET PRICES - 1998-2004 6
• TABLE F5 GDP (AT REAL PRICES) 2004-2006 7
• TABLE F6 CONSUMER PRICE INDEX 1995-2004 8
• TABLE F7 CONSUMER SPENDING 1998-2004 9
• TABLE F8 CONSTRUCTION MARKET VALUE - 1995-2004 AT CURRENT PRICES 10
• TABLE F9 CONSTRUCTION MARKET IN FRANCE - BREAKDOWN BY PRIVATE AND PUBLIC WORK 2004 10
• CHART F10 PRIVATE BUILDING IN FRANCE IN 2004 SHARE BY NEW AND RMI OUTPUT BY VALUE 11
• CHART F11 PRIVATE BUILDING IN FRANCE IN 2004 SHARE BY HOUSING AND NON-HOUSING OUTPUT BY VALUE 11
• TABLE F12 DWELLINGS STARTED AND PERMITS ISSUED FOR DWELLINGS IN FRANCE 2001-2004 12
• CHART F13 AVERAGE MIX OF PRODUCT SALES - 2004 BY VALUE 17
• TABLE F14 FRANCE - ELECTRICAL WHOLESALE MARKET 1998-2007 (€ BILLIONS) 18
• CHART F15 FRANCE - ELECTRICAL WHOLESALE MARKET 1998-2007 (€BN) 18
• TABLE F16 FRANCE - MARKET SHARE OF MAJOR SUPPLIERS - 2004 20
• CHART F17 REXEL TURNOVER BY GEOGRAPHIC AREA 2004 21
• TABLE F18 REXEL GROUP TURNOVER 1996-2004 23
• CHART F19 REXEL TURNOVER BY PRODUCT GROUP 2004 23
• TABLE F20 SONEPAR GROUP TURNOVER 1991-2004 24
• CHART F21 SONEPAR TURNOVER BY PRODUCT GROUP 25
• TABLE F22 SONEPAR - KEY COUNTRIES IN EUROPE - SHARE OF TURNOVER & NUMBER OF OUTLETS 27
• TABLE G1 THE GERMAN FEDERAL STATES - BY POPULATION 4
• TABLE G2 MAJOR CENTRES IN GERMANY 5
• TABLE G3 POPULATION OF GERMANY BY AGE 5
• TABLE G4 GERMANY - GDP AT MARKET PRICES 2000-2004 7
• TABLE G5 REAL GDP FORECASTS 2005-2006 8
• TABLE G6 CONSUMER PRICE INDEX 1995-2004 9
• TABLE G7 CONSUMER SPENDING 1995-2004 (AT 1995 PRICES) 9
• TABLE G8 CONSTRUCTION MARKET VALUE 1995-2004 10
• CHART G9 VALUE OF CONSTRUCTION IN GERMANY 1995-2004 AT CURRENT PRICES 11
• TABLE G10 NEW BUILD CONSTRUCTION MARKET IN GERMANY 1997-2004 12
• CHART G11 NEW BUILD CONSTRUCTION IN GERMANY IN 2004 BREAKDOWN BY VALUE OF BUILDING COMPLETIONS 12
• TABLE G12 RMI CONSTRUCTION MARKET IN GERMANY 1997-2004 13
• CHART G13 RMI CONSTRUCTION IN GERMANY IN 2004 BREAKDOWN BY VALUE 13
• TABLE G14 NUMBER OF NEW DWELLINGS - COMPLETED 1991-2004 14
• CHART G15 GERMANY - PRODUCT MIX BY VALUE - 2003 19
• TABLE G16 GERMANY - ELECTRICAL WHOLESALE MARKET 1998-2007 (€ BILLIONS) 20
• TABLE G17 GERMANY - MARKET SHARE OF MAJOR WHOLESALERS - 2004 23
• TABLE G18 SONEPAR GROUP TURNOVER 1991-2004 24
• CHART G19 SONEPAR TURNOVER BY PRODUCT GROUP 25
• TABLE G20 SONEPAR - KEY COUNTRIES IN EUROPE - SHARE OF TURNOVER & NUMBER OF OUTLETS 26
• TABLE G21 HAGEMEYER - GROUP SALES 1996-2004 (€ BILLIONS) 27
• CHART G22 REXEL TURNOVER BY GEOGRAPHIC AREA 2004 30
• TABLE G23 REXEL GROUP TURNOVER 1996-2004 31
• CHART G24 REXEL TURNOVER BY PRODUCT GROUP 2004 32
• TABLE G25 SOLAR GROUP TURNOVER 2001 - 2004 33
• TABLE B1 POPULATION SIZE - THE BELGIAN REGIONS 2004 4
• TABLE B2 POPULATION OF BELGIUM BY AGE 2004 4
• TABLE B3 BELGIUM - GDP AT MARKET AND CONSTANT PRICES 1996-2003 5
• TABLE B4 BELGIUM - GDP GROWTH - 2005-06 6
• TABLE B5 CONSUMER PRICE INDEX 1995-2004 7
• TABLE B6 CONSUMER SPENDING 1996-2004 8
• TABLE B7 CONSTRUCTION MARKET VALUE 1996-2004 AT CURRENT PRICES 9
• TABLE B8 HOUSING/NON-HOUSING CONSTRUCTION 1996-2004 BUILDING PERMITS 9
• CHART B9 HOUSING SECTOR BUILDING PERMITS IN BELGIUM IN 2004 BREAKDOWN BY VOLUME (NO. OF DWELLINGS) 10
• CHART B10 NON-HOUSING SECTOR BUILDING PERMITS IN BELGIUM IN 2004 BREAKDOWN BY VOLUME (NO. OF BUILDINGS) 10
• TABLE B11 DWELLING STARTS - 1980-2004 BY VOLUME 11
• CHART B12 BELGIUM - MIX OF PRODUCT SALES 15
• TABLE B13 BELGIUM - ELECTRICAL WHOLESALE MARKET SIZE 1998-2006 16
• TABLE B14 BELGIUM - MARKET SHARE OF LEADING WHOLESALERS - 2004 BY VALUE 17
• TABLE B15 SONEPAR GROUP TURNOVER 1991-2004 18
• CHART B16 SONEPAR TURNOVER BY PRODUCT GROUP 18
• TABLE B17 SONEPAR - KEY COUNTRIES IN EUROPE - SHARE OF TURNOVER & NUMBER OF OUTLETS 19
• CHART B18 REXEL TURNOVER BY GEOGRAPHIC AREA 2004 21
• TABLE B19 REXEL GROUP TURNOVER 1996-2004 22
• CHART B20 REXEL TURNOVER BY PRODUCT GROUP 2004 23
• TABLE N1 THE DUTCH PROVINCES - POPULATION MIX 4
• TABLE N2 MAJOR CENTRES IN THE NETHERLANDS 5
• TABLE N3 POPULATION OF THE NETHERLANDS BY AGE GROUPS 5
• TABLE N4 GDP AT MARKET AND CONSTANT PRICES 1995-2004 6
• TABLE N5 GDP GROWTH - 2002-2006 7
• TABLE N6 CONSUMER PRICE INDEX - 1999-2004 7
• TABLE N7 CONSUMER SPENDING - 1999-2004 8
• TABLE N8 CONSTRUCTION IN THE NETHERLANDS BY VALUE 2000-2003 8
• CHART N9 CONSTRUCTION OUTPUT BY SECTOR - 2004 BY VALUE 9
• CHART N10 BUILDING PERMITS ISSUED IN THE NETHERLANDS IN 2003 % BY VALUE 10
• CHART N11 BUILDING PERMITS ISSUED IN THE NETHERLANDS IN 2003 % BY VALUE 10
• CHART N12 BUILDING PERMITS ISSUED IN THE NETHERLANDS IN 2001-2003 BY VALUE 12
• TABLE N13 DWELLINGS - CONSTRUCTION COMPLETED 1980-2004 13
• CHART N14 DWELLINGS COMPLETED IN THE NETHERLANDS 1998-2004 14
• TABLE N15 DWELLINGS - CONSTRUCTION COMPLETED BY TYPE 2000-2004 (VOLUME) 15
• CHART N16 RENTED DWELLINGS - CONSTRUCTION COMPLETED BY TYPE % BY VALUE (2004) 15
• TABLE N17 RENTED DWELLINGS - CONSTRUCTION COMPLETED BY TYPE 2000-2003 16
• CHART N18 PRIVATE DWELLINGS - CONSTRUCTION COMPLETED BY TYPE% BY VALUE 16
• CHART N19 NETHERLANDS - PRODUCT MIX BY VALUE 20
• TABLE N20 NETHERLANDS - ELECTRICAL WHOLESALE MARKET 1998-2006 (€ MILLIONS) 21
• TABLE N21 NETHERLANDS - MARKET SHARE OF MAJOR WHOLESALERS - 2004 22
• TABLE N22 SONEPAR GROUP TURNOVER 1991-2004 23
• CHART N23 SONEPAR TURNOVER BY PRODUCT GROUP 23
• TABLE N24 SONEPAR - KEY COUNTRIES IN EUROPE - SHARE OF TURNOVER & NUMBER OF OUTLETS 24
• TABLE N25 HAGEMEYER - GROUP SALES 1996-2004 (€ BILLIONS) 25
• CHART N26 REXEL TURNOVER BY GEOGRAPHIC AREA 2004 27
• TABLE N27 REXEL GROUP TURNOVER 1996-2004 28
• CHART N28 REXEL TURNOVER BY PRODUCT GROUP 2004 28
• TABLE N29 SOLAR GROUP TURNOVER 2001 - 2004 29