Operational Environment

Glaston is a frontrunner in glass industry technologies and services, responding globally to the glass processing needs of the architectural, solar, appliance and automotive industries. Demand for Glaston’s products and services is dependent on demand for glass and glass processors’ capacity. Demand for glass is expected to grow by around 3–5% annually in the coming years. Demand for smart glass is expected to grow by 12–15 %.

Use of glass in construction is increasing through urbanization. Special requirements for glass are growing due to changing environmental factors, increasing safety regulations and energy-efficiency demands. In the automotive industry, the relative proportion of glass in vehicles is growing and use of thin glass, in particular, is increasing. Growth of solar energy, intelligent glass and energy-efficient glass packages is being supported by increasing environmental awareness and investments in renewable energy. Most, i.e. around 80%, of glass produced with Glaston’s technology is supplied to the building industry, around 10% to the automotive industry, and the remaining 10% to the appliance industry.

Glaston operates in a global market, and the company’s business is to a large extent linked to trends in global investment demand.

Market

Glaston has divided its market areas into EMEA, America, and Asia. The EMEA area has traditionally been a strong market for Glaston and in 2018, it generated approximately 54% of Glaston’s net sales. In 2018 Americas’ share of the company’s total revenue was approximately 27% and Asia’s share 19%.

Euro area growth weakened slightly towards the end of 2018. Trade policy tensions and the long-running and confusing Brexit situation further increased uncertainty. In Central Europe, and particularly in Germany and Austria, glass processing investment activity continued to be good, however. Tightening of Finland’s operational safety regulations for glass structures increased demand and investment. The situation in Turkey remained unchanged, and no change is expected before the 2019 local elections.

The European Commission forecasts that euro area growth will continue, but will decline slightly in 2019. Growth is supported, in particular, by Austria, Germany and Netherlands. Construction in Germany is projected to grow at an average rate of 5% annually, and the planned tightening of safety glass regulations will increase demand for safety glass and laminated glass in particular. Glass processing investment activity in Eastern Europe is expected to remain good, particularly in Poland.

The Asia-Pacific area is expected to be the fastest growing market area for glass processing in the coming years. The Chinese glass industry market is the largest in the Asia-Pacific area. Price competition is intense and local operators have a significant competitive advantage in a cost-conscious market. Glaston has developed a competitive product for the Chinese market, which the company began to market at the beginning of 2019.

In 2018, the markets in South-East Asia developed positively and, particularly in the Philippines, Indonesia, Thailand and Vietnam, interest in energy-efficient glass solutions was good. In India and its neighboring markets, development was steady. Market activity and demand, both for new glass processing machines and modernizations, were good in Australia and New Zealand during the review period.

In 2018, confidence in the US economic outlook continued to be strong in the fourth quarter, and GDP development continued to be good. Demand in Glaston’s market and customers’ willingness to invest clearly picked up in the review period. In Glaston’s assessment, tightening building regulations and higher quality requirements for glass supported demand for Glaston’s products. In addition, a tax reform that entered into effect in the USA at the beginning of last year, which will accelerate tax write-offs on investments, is expected to have a positive impact on customers’ willingness to investment.

In 2018, the challenges continued in the Mexico, Central America and South America markets.

Growth Drivers

Competitors

In the Machines business area, Glaston is one of the world’s leading operators. In this business area, Glaston is able to offer its customers the widest product range and service offering on the market.

In the Services business area, Glaston’s customer service network is the sector’s most extensive both geographically and in terms of personnel. There are more than 20 service locations. In addition, the service range provided by the Services business is the most comprehensive in the sector. Glaston’s comprehensive Glaston Care service agreements distinguish Glaston from its competitors. Maintenance services are available for every stage of the life cycle of products.

The glass technology market is still fragmented and Glaston has many competitors. However, due to the challenging market situation, consolidation has accelerated in recent years.