German furniture industry has to show flexibility

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Since the beginning of the pandemic, Germany's furniture manufacturers have faced extremely volatile market developments. The corona shock in spring 2020 was followed by a surprisingly quick recovery, which, however, was slowed down by the drastic lack of material in the course of 2021. The increase in the price of almost all preliminary products became a major burden for the industry - especially because the drastic cost increases could not be passed on in full or only with a delay.

The outbreak of the Ukraine war further exacerbated the disruptions in the supply chains. Since August, the availability of material seems to have stabilized somewhat in many areas, as internal surveys by members of the VDM and VHK show. As a result, the delivery times have also shortened again somewhat. However, the supply situation – for example in the solid wood sector – remains tense, and the supply chains are still fragile. And: The price increases for primary products and energy are continuing. According to official statistics, for example, the producer prices for wood-based materials, as one of the main components for kitchen and cabinet furniture, were 46.4% higher in June 2022 than in the same month of the previous year, and further increases have already been implemented or announced for the second half of 2022.

In the first half of 2022, German furniture manufacturers were able to increase their sales by 13.4% to around €9.5 billion. The growth in sales primarily reflects the increased cost of materials. The quantitative growth was significantly lower than the sales growth. In the meantime, the month of June showed weakened momentum with a sales increase of 4.3%. In the first half of 2022, domestic sales developed positively at plus 13.8% against the background of good demand in winter and in view of the high order backlog at the end of 2021. After a slump in demand in the summer, the VDM expects new impetus here in the autumn as well. Foreign sales in the German furniture industry also increased by 12.6% in the first half of 2022. While foreign sales developed much more dynamically than domestic sales up to the end of February, the trend has reversed since March due to the negative effects of the war in Ukraine and the sharp rise in transport and logistics costs. The current sales of German furniture manufacturers, both domestically and abroad, are well above the level of 2019 and thus above the comparative values ​​before the Corona crisis.

With regard to the sales development in the first half of 2022, there are significant differences between the individual segments of the German furniture industry. According to the official statistics, the kitchen furniture industry recorded a strong increase in sales of 12.4% to around €3.2 billion. Manufacturers of upholstered furniture registered the highest increase in sales, with sales increasing by 19.1% to €577 million from January to June 2022. The sales development in the largest segment of the furniture industry – other furniture (including living room, dining and bedroom furniture) and furniture parts – was also more positive than the industry average with a plus of 17.1% to €3.3 billion. The office furniture industry registered growth of 10.9% with sales of around €1.06 billion.

A look at the individual export markets reveals the following picture: In most European countries, sales increased significantly against the background of overcoming the negative economic effects of the Corona crisis and the lifting of travel restrictions. Particularly pleasing and not necessarily to be expected is the increase in exports to the United Kingdom with a strong plus of 17%. France is still number one in the ranking of the most important export markets with a slight minus of 2.8%, followed by Switzerland with plus 3%, Austria with minus 3.4% and the Netherlands with plus 11.6%. Significant growth was also recorded in other important European export markets such as Italy, Spain, Poland, the Czech Republic and Norway. The export markets outside Europe have developed differently over the course of the year to date. From the point of view of the industry, it was particularly positive that the USA once again took over the role of the international economic engine in the furniture sector after overcoming the consequences of the Corona crisis - German furniture exports across the Atlantic climbed by an impressive 25.8% from January to June 2022 compared to the previous year . With a minus of 10.4%, China remains the second most important non-European export market for German furniture. While furniture exports to Russia have fallen by 29% in the year to date, Saudi Arabia has developed extremely positively (+18.7%) against the background of the country's political and economic opening, although exports to the country are still at a relatively low level level moving.

German furniture imports increased by 13.5% to €5.8 billion. However, the momentum in the individual countries was very inconsistent: With growth of 24.1% to almost €1.9 billion, imports from China rose at an above-average rate. However, the growth in import value was mainly due to the significant increase in the price of furniture made in China - the import volume fell by 8.6% in the same period. In terms of import value, China is further expanding its position as the most important furniture country of origin, ahead of Poland (+10.6%). Poland's share of total imports fell to 26.2%. Imports from third-placed Italy fell slightly by 0.5%. Imports from Vietnam (+31.9%), Turkey (+80.4%) and Lithuania (+19.2%) increased significantly, while imports from Ukraine (-18.8%) and Belarus (- 25,

With the current order situation, light and shadow are close together. According to internal surveys by the trade associations, incoming orders in the German kitchen furniture industry rose by 15.5% in the first seven months of 2022, by 12.1% in the living room furniture industry and by as much as 25.3% in the upholstered furniture industry. This created a cushion of orders that should last well into the second half of the year. Incoming orders fell sharply in July: the corresponding values ​​were down 6.7% in the kitchen furniture industry, they fell by almost 35% in the living room furniture industry and by as much as 38.3% in the upholstered furniture industry.

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