El Segundo, Calif. — Home appliance manufacturers are looking to increase their market share through acquisitions, new territories and new market segments to take advantage of strong growth in the market, according to a new report from IHS Technology (NYSE: IHS).
Worldwide shipments of home appliances are forecast to reach 611 million units by the end of 2014, up 4.8 percent from 2013, compared to an increase of 4.5 percent in 2013, according to the reports “Major Home Appliances 2013” and “Small Home & Personal Care Appliances 2014” from the Consumer Electronics service and Home Appliances research area of IHS Technology. Revenue growth is projected to increase by 7.1 percent in 2014, up from 5.9 percent last year.
“Recent acquisitions within the home appliance market show that the world’s leading and largest home appliance producers hope to become even bigger, enlarging their footprint by moving into new territories and market segments,” said Dinesh Kithany, senior analyst for home appliances at IHS, in a statement. “Production is also relocating to increase efficiency and to cut down costs, while being closer to their addressable regional markets. Such developments confirm what IHS has been predicting.”
The reports also reveal several major acquisitions by leading home appliance manufacturers that are expected to boost their businesses globally.
- U.S.-based Whirlpool Corp., the world’s No. 1 home appliance maker, recently announced plans to buy a majority stake in Indesit Company S.p.A. of Italy to expand its business in Europe. An earlier purchase of a 51 percent stake in Hefei Rongshida Sanyo Electric, the third largest appliance maker in China, is expected to significantly grow Whirlpool’s presence in the Asian market. Whirlpool also formed a joint venture with another Chinese-based maker, Hisense-Kelon Electrical Holdings, to share research, technology and production resources. In the U.S., Whirlpool and longtime partner KB Homes announced a new collaboration to offer Whirlpool’s smart appliances to homebuyers.
- Net sales in the second quarter of U.S.-based Middleby Corp.’s home appliances Residential Kitchen Equipment Group increased 20.6 percent to $70.9 million, compared to $58.8 million the same time a year ago. Residential Kitchen Equipment was formed from the 2013 acquisition of Viking Range Corp., makers of professional-style home appliances. Viking established its own distribution operations through the acquisition and transition of independent distributors covering the U.S., Canada and Mexico, reported IHS.
- The acquisition by Spain’s CNA Group of appliance maker Fagor Electrodomesticos, including brands Fagor, Edesa, Aspes and Spendid, strengthens its position in the appliance market across several segments, including laundry, cold and cooking appliances, small electric housewares, and comfort conditioning appliances.
- Sweden’s Electrolux AB is said to be interested in buying the home appliance business division of Kentucky-based General Electric (GE). The sale, estimated to be at least $2 billion, will help expand business in the North American market, which shows “good signs of recovery and growth,” reported IHS. In addition to increasing its 30 percent share of appliance sales in North America, the acquisition also will help drive sales to home builders where GE holds a large share of the market.
- However, New York-based Quirky Inc., a five-year-old startup, is interested in partnering with private-equity firms such as Blackstone Group LP to take a majority stake in GE’s appliance business, with GE retaining a stake, reported IHS. What’s interesting, said IHS, is that GE is one of Quirky’s financial backers, investing $30 million last year in the company. GE also shared thousands of patents with Quirky when they formed a partnership last year to develop a line of smart-home devices.
Kithany expects the home appliance market to continue to see similar type acquisitions and partnerships. “Synergies are expected not only within appliance companies but also across companies providing technological know-how, expertise and support to home automation segment.”