AC Market Size
Content
THE NATIONAL COMMERCIAL BANK
IN FOCUS: THE SAUDI AIR CONDITIONING SECTOR JANUARY-DECEMBER 2008
APRIL 2009
Contents Domestic Market Determinants Market Size Local Market Production Import/Export Statistics Impact of WTO Future Outlook and Conclusion
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Executive Summary
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The market of air conditioners is governed by four driving and influencing factors, which shape the market size and growth potential. These factors are 1. The growing population including expatriates, 2. The establishment of new businesses; public and private, 3. The continuously decreasing prices of air conditioning with the technological advancements, and finally 4. The year round hot climate. There are two main demand factors which shape the air conditioning market. They are: 1. The continuous formation of new households, private business enterprises, new governmental and private buildings and other governmental and private establishments creates a large demand for air conditioners and other related equipment. 2. The other driving demand factor is the replacement of aging air conditioning units that are either irreparable or not functioning as needed. The local industry has been active in developing compact and lightweight models and split-type units in line with the trends of domestic demand. The market of imports/exports for the air conditioning industry is one in which the kingdom is trying to achieve the ultimate goal of being self sufficient. Currently, these statistics have been fluctuating, however the general trend is the exports have been on a slow rise, and imports on a slow fall. Before joining the WTO, the air conditioning manufacturers were protected by an import tariff of 12%, which was lowered to 5% before Saudi Arabia was finally accepted into the WTO. Forecasts for 2009 show that the Saudi Arabian air conditioning market will not be dramatically affected by the world economic crisis, and will actually start rising and going up again by the end of 2009 beginning 2010. The fact remains that the air conditioning sector is one that will never go out of business, and as long as the local manufacturers keep on producing high quality Chlorofluorocarbon or (CFC) free units at competitive prices, they will continue to dominate this market even with the huge influx of foreign brands.
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Dr. Said A. Al-Shaikh Chief Economist [email protected] Prepared by: Mohamad Jomaa Economist [email protected] M. Younas Malick Senior Economist [email protected]
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NCB Economics Department
Overview In 1967, Zamzam Coolers opened the first air conditioning factory in the Kingdom of Saudi Arabia. Since then, there have been rapid developments in the industry. Quality has improved, efficiencies have advanced, Chlorofluorocarbon or (CFC) free air conditioners have been produced, but most importantly prices have dropped dramatically. Propelling the industry's growth is the hot climatic conditions witnessed in Saudi Arabia. This has transformed what is perceived as a luxury item abroad into a much required necessity in the KSA. Not only is demand relatively inelastic; but the increasing affluence of Saudi civilians coupled with their access to cheap electricity has meant that the purchase and maintenance of air conditioners has become affordable; creating a large market demand for this technology.
Domestic market determinants and key growth drivers The market of air conditioners is governed by four driving and influencing factors, which shape the market size and growth potential. These factors are (1) the growing population including expatriates, (2) the establishment of new businesses; public and private, (3) the continuously decreasing prices of air conditioning with the technological advancements, and finally (4) the year round hot climate. Households and businesses The continuous formation of new households, private business enterprises, new governmental and private buildings (including schools and mosques) and other governmental and private establishments (including hospitals and other small-medium sized facilities) creates a large demand for air conditioners and other related equipment. The other driving demand factor is the replacement of aging air conditioning units that are either irreparable or not functioning as needed.
TABLE 1 - Saudi Arabian Local Demand 2008 Units Fresh Household Demand 532,000 205,000 2,420,000 Total Demand 3,157,000 Fresh Business Demand Replacement Demand
GRAPH 1 - Domestic production capacity By Type - 2008
Central Air Conditioning 2% Desert Coolers 6%
Split Units 18%
Window Units 74%
There are fifteen factories scattered across various regions of the kingdom producing air conditioners for the local and international markets. These local factories have high production capacities, catering largely to the national demand with around 65% of the market, as 35% of the market demand is met by imports of externally manufactured air conditioners. In 2008, the domestic demand for all types of air conditioning units, excluding commercial, was estimated to have increased by 2.71% to 2.58 million units, and is forecasted to increase by another 2.64% to 2.65 million units by the end of 2009. In addition, Saudi Arabia exported approximately 1.2 million units to the regional and international markets in 2008, with similar numbers expected for 2009.
The main reason households (and businesses) keep growing and forming in the kingdom is because of the steady increase of the local and expatriate population. Over the last few years, the average growth rate of the Kingdoms population was 2.45% per annum; leading to unintended increase in demand of air conditioning units per capita. This, in turn, contributes to an overall larger demand for air conditioning units. On the business side, with the Saudi economy continuously growing, new businesses continue opening to cater for the increasing demand on goods and services; translating into higher sales for businesses all around. Technology and prices The fast paced technological advancements in all industrial sectors, including the air conditioning industry, is allowing producers to cut down production time, reduce inputs, and most importantly increase quality of production. As a result, units now last longer, need less space and maintenance, and cost less to the manufacturer which translates to lower prices to the end user. In 2001, the average price of an air conditioner was SAR 1,670 regardless of power and type; in 2009 the average price of an air conditioner with the same criteria as
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NCB Economics Department
before costs SAR 1,200, a decrease of SAR 470. On top of the price reduction, every air conditioner produced is now CFC free, and environmentally friendly; not disrupting either the world ecosystem or the ozone layer, which used to be a global concern in this industry. These Green or environmentally friendly air conditioners are more widely available and easily installed, especially with the rising world temperatures. Market size by units The estimated population in Saudi Arabia as of late 2008 was around 27.6 million, including expatriates. Assuming a growth rate of 2.45% per annum, this means that the Saudi population will increase by a little over 676,000 persons this year creating an incremental demand of around 123,000 housing units, which in turn generates a fresh demand of a little over 532,000 various air conditioning units. While most commercial buildings and shopping centers use heavy-duty central air conditioning units, small private and public sector establishments' like mosques, convenient stores and others, typically use window or split units. The creation of new establishments is estimated to generate a fresh demand of approximately 205,000 units per year in the kingdom. Thus, the combined yearly incremental demand created by households and establishments in the kingdom is 0.737 million units. (Table 1 and Table 2)
TABLE 2 - Saudi Arabian Local Demand 2008 Value (SR Million) Fresh Household Demand Fresh Business Demand Replacement Demand Total Demand 638 246 2,904 3,788
existing air conditioners will be replaced. Therefore the total number of units replaced per year kingdom wide is 2.76 million. The estimated total market demand for air conditioners in the kingdom of Saudi Arabia for 2009 is 3.2 million units. This demand of air conditioning units is among the highest in the region as well as the world relative to the size of the Saudi Arabian population. Market size by value Assuming an average selling price of SR1,200 per unit, the overall market value of air-conditioners sold in the Kingdom is estimated at around SR 3.79 billion (Table 2). In addition, the combined market value of the related spare parts, equipment and commercial heavy duty type air-conditioners is estimated at SR1.1 billion each year. Thus, the overall market value of air-conditioners and related spare parts sold in the Kingdom is estimated
GRAPH 2 - Domestic Producers of Air
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Combined Total Capactiy 7% 15% Saudi Factory 35% Others National Factory 43%
Conditioners - 2008
Zamil Factory
The replacement of aging units constitutes the principle share of the market demand. Based on the total population of 27.6 million and an average household size of 5.5 members per family, the total number of households occupied as of late 2008 was estimated to be 5.02 million. Assuming there are 4.33 air conditioners on average per household, the approximate various units currently being used are 21.73 million units. As for the existing commercial or business establishments, the replacement market is around 1.20 million units with another 0.70 million units in government entities and 0.6 million units in large private or public establishments like hospitals and stores, giving a grand total of 2.5 million units. Putting all the numbers together, the existing stock of air conditioners, public and private, in the kingdom is 24.23 million units. Assuming the average life span of a unit is 10 years, implying that every year 10% of the
NCB Economics Department
at SR5.44 billion a year. As a percentage of Saudi Arabia's Manufacturing sector, the air conditioning industry constitutes around 5%, which reflects the importance and value this industry has to both the consumers and manufacturers. In value terms, the market is believed to be growing at around 3.5% to 5% a year even though prices are under continuous pressure to decrease due to innovations, new technologies and more recently due to fierce competition from the Far East, with their very low prices. Local Market Production Leading the industry with the largest operating plant in the Kingdom, Zamil Air Conditioners has an installed capacity of 1.35 million units, representing nearly 42% of the total installed capacity in the kingdom. The second largest local producer is the National Factory of AirConditioners, having a total installed capacity of 1.082 million units (35% of total market installed capacity),
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GRAPH 3 - The Composition of Saudi Imports of Air Conditioners - by Units - 2008
Wall Air Conditioners 70%
Other Selfcontained Wall units 1%
Feron A/C's 28% Others
Imports Over the time period from 1997-2001 the air conditioning imports have steadily been rising. However, since 2002 imports of air conditioners have accelerated, rising from nearly 500,000 units to over 1.6 million units in 2006. The main increase was in the window air conditioners, because of their easy maintenance, and more importantly their relatively low prices. It is also noticeable that there was a large jump in the importing of central air conditioning units. This indicates that many businesses have opted to install one main central air conditioning unit rather than multiple window or split units. (Graph 3, Graph 4 and Graph 5)
GRAPH 5 - Saudi Imports of Air Conditioners by Number,
Units (Thousand)
produces 801,000 window type units, 250,000 split units, and the remaining production is between desert coolers and small central units. Locally produced air conditioners of foreign brands consist of Carrier, Gibson, York, and Falcon. Saudi Air Conditioners Factory, owned by Al-Juffali Brothers, has a total operating capacity of 484,000 units (Carrier brand), consisting of 450,000 window-type units, 9,000 central units and 25,000 split units. The local industry has been active in developing compact and lightweight models and split-type units in line with the trends of domestic demand. Besides the local producers, there are a number of importing agents, wholesalers and retail distributors in the air-conditioning market. (Graph 1 and Graph 2)
GRAPH 4 - The Composition of Saudi Imports of Air Conditioners - by Value - 2008
Others 3%
1997-2008
1,800 1,600 1,400 1,200 1,000 800 600 400 200 0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Feron A/C's 32%
Other Selfcontained Wall units 2%
Wall Air Conditioners 63%
Exports The exports, on the other hand, have fluctuated over the years, but went well beyond a million units in 2007, and edged very close to it within the preliminary results for 2008. These statistics indicate that over time both imports and exports have been on the rise. Saudi Arabia currently has a custom union with the Gulf Cooperation Council (GCC), allowing the trading of products to be an easy and quick transaction due to the lack of restrictions and obstacles, like currency and language; which is usually an issue with overseas traders. This is why most of the exports of air conditioning units are
GRAPH 6 - Composition of Saudi Exports of Air Conditioners
Others 9% Feron A/C's 10%
- by Units - 2008
Import/Export statistics The market of imports/exports for the air conditioning industry is one in which the kingdom is trying to achieve the ultimate goal of being completely self sufficient. Currently, these statistics have been fluctuating, however the general trend is exports have been on a slow rise, and imports on a slow fall.
Wall Air Conditioners 37%
Other Selfcontained Wall units 44%
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directed to neighboring countries including Kuwait and United Arab Emirates. (Graph 6, Graph 7 and Graph 8)
GRAPH 7 - Composition of Saudi Exports of Air Conditioners - by Value - 2008
Others 7% Feron A/C's 13% Wall Air Conditioners 34%
Impact of Saudi Accession to the WTO In December 2005, Saudi Arabia finally joined the World Trade Organization (WTO) after twelve years of discussions for full compliance with WTO rules, regulations and procedures. Before joining the WTO, the air conditioning manufacturers were protected by an import tariff of 12%, which was lowered to 5% just before Saudi Arabia was finally accepted into the WTO. There was a fear that this tariff reduction would induce dumping from the Far East and therefore cripple the local manufacturers’ ability to compete with the potentially low prices. Imports did initially increase from 2005 till 2006, but local producers proved to be sturdier than expected as high quality products of the local manufacturers, they prevailed in 2007, however imports increased again by a sizable amount in 2008.
Other Selfcontained Wall units 46%
Net Imports Looking at these values as ratios, we can see that the net imports-exports have been fluctuating despite continually rising domestic production. In 2008 the imports increased dramatically relative to 2007, but according to early projections for 2009, the imports will decrease relative to 2008 but not as low as 2007. With no doubt, air-conditioning is one of the success manufacturing stories in the kingdom. Its success is the result of the adoption of efficient import substitution in the realm of sound exchange rate policy along with the provision of public goods such as physical infrastructure and subsidized energy prices. Meanwhile reduced import tariffs coupled with robust economic growth over the period 2003-2008, produced a strong demand response, consequently increasing the level of net-imports. To catch up with rising demand, further investment is needed to enhance the local production capacity, with lesser reliance on government privileges and funding facilities. (Graph 9)
GRAPH 8 - Saudi Exports of Air Conditioners by Number,
Units (Thousand) 1,400 1,200 1,000 800 600 400 200 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
GRAPH 9 - Saudi Net Import/Export of Air Conditioners
Unit (Thousand)
by Number
1,000 800 600 400 200 0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
-200 -400
Future outlook: 2009 and beyond In 3Q2008, the global economy reached uncharted waters. The whole world went into a downward spiral with world stocks sinking to new unseen lows. Saudi Arabia is one of the few countries that were less affected by what was hitting the rest of the world. The prime source of Saudi Arabian income is from oil sales, and even with the barrel dropping to the low $40's, government projects and spending still took place. The private sector was also not severely affected because the main importers of Saudi Arabian air conditioners are neighboring countries that are in the same boat; i.e. money rich countries where public spending has remained strong. Nevertheless, forecasts for 2009 show that the Saudi Arabian air conditioning market will not be dramatically affected by the world economic crisis, and will actually start rising and going up again by the end of 2009 beginning 2010. These numbers are expected to increase with the uninterrupted growth of the Non-Oil GDP through government expenditure on infra-structure and
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1997-2008
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economic cities as well as mosques, schools and government buildings. With the continuously growing Saudi population and the expatriates arriving for work, by 2020, the population is estimated to be 36.74 million, with 7.1 million households occupied, using approximately 35 million air conditioning units. (Table 3)
TABLE 3 - Saudi Arabian Future Demand Year Fresh Household Demand Fresh Business Demand Replacement Demand Total Demand 2010 558,000 213,000 2,540,000 3,311,000 2015 630,000 235,000 2,870,000 3,735,000 2020 711,000 260,000 3,240,000 4,211,000
Conclusion Saudi Arabia is a country changing in many aspects, however the geographical fact remains that it is a very hot country especially during the summer season. This is why; the demand of air conditioning units -regardless of type- will continue to be available to all individuals in the society. The demand for air conditioners is relatively inelastic; because even if prices rise sharply, the demand will affect the purchasing of new units, however there will be noticeable growth in the spare parts and related equipment market. As the Saudi population continues to be growing while the number of members per family keeps on decreasing gradually, the number of occupied households keeps on increasing. As a result the average number of air conditioning units per household will assume a rising trend. Therefore the air conditioning sector is one that will never go out of business, as long as the local manufacturers keep on producing high quality CFC free units at competitive prices and they will continue to dominate the market even with the huge influx of foreign brands. On the technological front, the one main change is the fact that the local manufacturers are now heading towards producing more split units rather than window units due to their quiet nature, and powerful cooling capability as compared to the loud and relatively inefficient window units.
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Factory Name Saudi Air Condition Factory National Factory For Air Conditions Arab Gulf Factory For Air Conditioners and Heaters Al-Kawthar Factory Zamil Air Condition Factory Zamil Air Condition Factory and Home Appliances Al-Nisr Desert Coolers Factory ZamZam Air Condition Factory Hawk Island Factory for Air Conditions and Refrigerators - Makkah Hawk Island Factory for Air Conditions and Refrigerators - Riyadh Hawk Island Factory for Air Conditions and Refrigerators - Bareedah Al-Raha Air Condition Factory Al-Waha Air Condition Factory Al-Jazeerah Factory for Air Conditions and Refrigerators Desert Hawk Coolers TOTAL
Window Units 450,000 801,000 0 0 0 1,000,000 0 4,000 0 0 0 0 0 40,000 0 2,295,000
Split Units 25,000 250,000 0 0 0 300,000 0 0 0 0 0 0 0 0 0 575,000
Central Air Conditioning 9,000 1,000 0 0 0 50,000 0 0 0 0 0 0 0 0 0 60,000
Desert Coolers 0 30,000 1,500 5,000 0 0 14,000 4,000 15,000 5,000 5,000 20,000 50,000 40,000 8,000 197,500
Combined Total Capactiy 484,000 1,082,000 1,500 5,000 0 1,350,000 14,000 8,000 15,000 5,000 5,000 20,000 50,000 80,000 8,000 3,127,500
Saudi Imports of Air Conditioners by Value, 1997-2008
Value (Thousand)
1,600 1,400 1,200 1,000 800 600 400 200 0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Saudi Exports of Air Conditioners by Value, 1997-2008
Value (Thousand)
1,400 1,200 1,000 800 600 400 200 0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
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Imports AC Product Type Wall Air Conditioners Other Self-contained Wall units Central Feron Air Conditioners Other Feron Air Conditioners, Refrigeration Other Air Conditioners, Ref, and Rev valve Other Feron Central Air Conditioners Other Feron Air Conditioners with Refrigeration Other Air Conditioners with Refrigeration unit Central Feron Air Conditioners without refrigeration Other Feron Air Conditioners, without Refrigeration Other Air Conditioners without Refrigeration unit Total Change(%) Imports AC Product Type Wall Air Conditioners Other Self-contained Wall units Central Feron Air Conditioners Other Feron Air Conditioners, Refrigeration Other Air Conditioners, Ref, and Rev valve Other Feron Central Air Conditioners Other Feron Air Conditioners with Refrigeration Other Air Conditioners with Refrigeration unit Central Feron Air Conditioners without refrigeration Other Feron Air Conditioners, without Refrigeration Other Air Conditioners without Refrigeration unit Total Change(%) 1997 124,600 16,600 43,100 8,000 43,800 28,400 7,200 64,500 25,100 6,000 9,500 376,800 1998 124,900 17,800 58,800 22,700 28,600 52,400 2,300 23,300 37,000 4,600 11,600 384,000 1.91% 1999 160,879 20,551 54,700 13,300 22,500 35,500 3,700 24,600 28,100 3,700 13,500 381,030 -0.77% 2000 190,200 54,156 117,800 18,100 30,300 31,900 4,600 26,500 39,500 2,700 18,700 534,456 40.27% 2001 165,087 89,808 85,151 11,317 42,919 21,090 6,586 24,801 36,085 3,667 8,817 495,328 -7.32% 2002 171,600 91,700 86,900 10,600 48,600 17,800 8,800 26,700 32,100 3,356 21,800 519,956 4.97% 1997 72,716 18,556 13,892 3,601 15,071 4,897 3,196 28,294 9,297 1,728 3,884 175,132 1998 65,498 7,149 21,650 9,437 10,329 15,040 771 10,295 13,230 2,534 12,762 168,695 -3.68% 1999 83,543 37,149 29,733 5,994 10,703 32,275 2,956 12,757 29,850 2,513 7,786 255,259 51.31% 2000 168,544 157,855 46,436 13,463 24,008 6,850 12,602 21,157 16,560 1,176 23,316 491,967 92.73% 2001 215,000 175,000 50,000 15,482 27,609 7,878 14,491 15,000 15,000 1,340 23,200 560,000 13.83% 2002 185,000 143,000 45,000 14,000 25,000 5,000 12,000 13,000 13,000 1,200 17,000 473,200 -15.50%
Units 2003 628,951 15,125 48,631 34,648 25,539 174,626 24,718 2,523 47,776 8,244 21,172 1,031,953 118.08% Value 2003 662,223 19,123 59,896 51,867 40,606 33,918 34,984 11,853 67,993 13,393 16,439 1,012,295 94.69% 2004 763,979 10,085 68,206 32,014 20,567 25,980 27,656 10,726 87,506 9,494 20,461 1,076,674 6.36% 2005 758,220 14,680 125,611 54,684 10,939 17,336 23,868 3,698 100,998 12,780 17,381 1,140,195 5.90% 2006 819,189 12,383 131,196 26,731 15,753 68,740 66,968 7,212 183,150 11,137 17,052 1,359,511 19.23% 2007 788,705 35,579 108,338 14,074 13,346 37,352 11,898 5,455 142,074 11,959 17,217 1,185,995 -12.76% 2008 803,947 23,981 119,767 20,403 14,550 53,046 39,433 6,334 162,612 11,548 17,134 1,272,753 7.32% 2004 1,023,938 10,469 65,627 15,664 1,143 9,094 32,050 5,781 98,852 4,990 5,162 1,272,770 23.34% 2005 946,673 8,583 136,656 42,848 1,540 121,063 37,717 9,280 115,979 8,884 9,095 1,438,318 13.01% 2006 1,046,118 11,392 152,367 28,815 9,407 50,851 117,397 5,861 96,555 7,373 5,003 1,531,140 6.45% 2007 996,396 17,752 144,512 12,432 5,474 85,957 3,863 7,571 106,267 8,128 7,049 1,395,400 -8.87% 2008 1,021,257 14,572 148,439 20,624 7,441 68,404 60,630 6,716 101,411 7,751 6,026 1,463,270 4.86%
Exports AC Product Type Wall Air Conditioners Other Self-contained Wall units Central Feron Air Conditioners Other Feron Air Conditioners, Refrigeration Other Air Conditioners, Ref, and Rev valve Other Feron Central Air Conditioners Other Feron Air Conditioners with Refrigeration Other Air Conditioners with Refrigeration unit Central Feron Air Conditioners without refrigeration Other Feron Air Conditioners, without Refrigeration Other Air Conditioners without Refrigeration unit Total Change% Exports AC Product Type Wall Air Conditioners Other Self-contained Wall units Central Feron Air Conditioners Other Feron Air Conditioners, Refrigeration Other Air Conditioners, Ref, and Rev valve Other Feron Central Air Conditioners Other Feron Air Conditioners with Refrigeration Other Air Conditioners with Refrigeration unit Central Feron Air Conditioners without refrigeration Other Feron Air Conditioners, without Refrigeration Other Air Conditioners without Refrigeration unit Total Change% 1997 324,900 6,900 6,100 600 8,000 13,400 600 10,100 800 3,600 5,700 380,700 1998 364,899 11,488 1,545 477 5,873 11,891 409 843 4,999 2,818 3,184 408,426 7.28% 1999 256,488 5,465 2,687 3,411 271 7,234 913 780 4,244 862 1,703 284,058 -30.45% 2000 248,262 7,824 5,192 1,367 740 5,748 641 2,584 9,723 1,723 4,363 288,167 1.45% 2001 206,883 9,225 8,248 2,393 2,523 8,290 654 1,402 2,351 1,801 1,764 245,535 -14.79% 2002 1997 271,000 6,000 230 6,000 6,000 10,000 223 11,000 1,000 2,000 3,000 316,453 1998 301,000 10,000 1,000 4,500 5,000 9,000 12,112 1,000 3,000 2,000 3,000 351,612 11.11% 1999 273,000 5,000 1,000 3,000 5,500 11,000 24,000 1,000 6,000 1,000 2,000 332,500 -5.44% 2000 229,773 7,196 1,517 1,302 987 4,269 12,112 5,635 9,031 1,069 9,895 282,786 -14.95% 2001 208,660 10,395 3,785 1,339 2,519 4,202 16,074 2,545 1,222 1,356 2,823 254,921 -9.85% 2002
Units 2003 401,958 26,866 25,057 966 4,396 13,673 4,352 3,673 5,920 2,136 15,408 504,405 83.38% 2004 593,192 180,085 14,927 1,031 26,443 9,198 17,335 4,188 5,202 2,879 17,310 871,790 72.84% 2005 497,575 103,476 19,992 999 15,420 11,436 10,844 3,931 5,561 2,508 16,359 688,098 -21.07% 2006 267,368 297,753 10,696 9,746 32,008 2,629 8,411 41,455 35,502 15,715 36,365 757,648 10.11% 2007 452,712 546,939 15,205 55,030 24,624 7,754 15,806 16,525 15,422 3,033 23,345 1,176,393 55.27% 2008 360,040 422,346 12,951 32,388 28,316 5,192 12,109 28,990 25,462 9,374 29,855 967,021 -17.80%
225,000 9,200 1,400 1,350 1,050 4,260 17,395 3,500 7,500 900 3,500 275,055 7.90% Value
2003 374,387 14,987 27,800 1,421 6,134 20,751 6,020 9,216 5,252 2,596 13,857 482,421 62.86%
2004 464,578 32,228 25,684 1,233 23,733 9,799 7,572 2,944 6,449 2,010 6,557 582,787 20.80%
2005 419,483 23,608 26,742 1,327 14,934 15,275 6,796 6,080 5,851 2,303 10,207 532,604 -8.61%
2006 238,136 248,226 28,337 6,999 26,638 11,486 23,445 34,357 19,602 1,188 13,440 651,854 22.39%
2007 374,066 600,574 26,921 58,366 21,768 12,187 25,166 14,460 10,634 4,650 10,068 1,158,860 77.78%
2008 306,101 424,400 27,629 32,683 24,203 11,836 24,306 24,409 15,118 2,919 11,754 905,357 -21.88%
255,000 8,300 5,192 1,367 740 5,748 736 3,500 9,200 1,743 4,700 296,226 20.65%
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NCB Economics Department
The Economics Department Research Team
Head of Research
Said A. Al Shaikh, PhD Chief Economist [email protected]
Sector Analysis/Saudi Arabia
Muhammad Y. Malick Senior Economist [email protected] Zulfiqar Bashir, PhD Senior Economist [email protected] Mohamad Jomaa Economist [email protected]
Macroeconomic Analysis
Perihan Al-Husseini Senior Economist [email protected] Tamer El Zayat Senior Economist [email protected] Dana Nammari Economist [email protected]
Management Information System
Majed Al Ghalib MIS Specialist [email protected]
Disclaimer: The information and opinions in this research report were prepared by NCB’s Economics Department. The information herein is believed by NCB to be reliable and has been obtained from public sources believed to be reliable. However, NCB makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this report constitute the current judgment of the author/authors as of the date of this report. They do not necessarily reflect the opinions of NCB as to the subject matter thereof. This report is provided for general informational purposes only and is not to be construed as advice to investors or an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or other securities or to participate in any particular trading strategy in any jurisdiction or as an advertisement of any financial instruments or other securities. This report may not be reproduced, distributed or published by any person for any purpose without NCB’s prior written consent. To be added to the NCB Economics Department Distribution List Please contact: Mr. Noel Rotap Tel.: +966-2-646-3232 Fax: +966-2-644-9783 Email: [email protected]
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IN FOCUS: THE SAUDI AIR CONDITIONING SECTOR JANUARY-DECEMBER 2008
APRIL 2009
Contents Domestic Market Determinants Market Size Local Market Production Import/Export Statistics Impact of WTO Future Outlook and Conclusion
Page 2 3 3 4 5 5
Executive Summary
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The market of air conditioners is governed by four driving and influencing factors, which shape the market size and growth potential. These factors are 1. The growing population including expatriates, 2. The establishment of new businesses; public and private, 3. The continuously decreasing prices of air conditioning with the technological advancements, and finally 4. The year round hot climate. There are two main demand factors which shape the air conditioning market. They are: 1. The continuous formation of new households, private business enterprises, new governmental and private buildings and other governmental and private establishments creates a large demand for air conditioners and other related equipment. 2. The other driving demand factor is the replacement of aging air conditioning units that are either irreparable or not functioning as needed. The local industry has been active in developing compact and lightweight models and split-type units in line with the trends of domestic demand. The market of imports/exports for the air conditioning industry is one in which the kingdom is trying to achieve the ultimate goal of being self sufficient. Currently, these statistics have been fluctuating, however the general trend is the exports have been on a slow rise, and imports on a slow fall. Before joining the WTO, the air conditioning manufacturers were protected by an import tariff of 12%, which was lowered to 5% before Saudi Arabia was finally accepted into the WTO. Forecasts for 2009 show that the Saudi Arabian air conditioning market will not be dramatically affected by the world economic crisis, and will actually start rising and going up again by the end of 2009 beginning 2010. The fact remains that the air conditioning sector is one that will never go out of business, and as long as the local manufacturers keep on producing high quality Chlorofluorocarbon or (CFC) free units at competitive prices, they will continue to dominate this market even with the huge influx of foreign brands.
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Dr. Said A. Al-Shaikh Chief Economist [email protected] Prepared by: Mohamad Jomaa Economist [email protected] M. Younas Malick Senior Economist [email protected]
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NCB Economics Department
Overview In 1967, Zamzam Coolers opened the first air conditioning factory in the Kingdom of Saudi Arabia. Since then, there have been rapid developments in the industry. Quality has improved, efficiencies have advanced, Chlorofluorocarbon or (CFC) free air conditioners have been produced, but most importantly prices have dropped dramatically. Propelling the industry's growth is the hot climatic conditions witnessed in Saudi Arabia. This has transformed what is perceived as a luxury item abroad into a much required necessity in the KSA. Not only is demand relatively inelastic; but the increasing affluence of Saudi civilians coupled with their access to cheap electricity has meant that the purchase and maintenance of air conditioners has become affordable; creating a large market demand for this technology.
Domestic market determinants and key growth drivers The market of air conditioners is governed by four driving and influencing factors, which shape the market size and growth potential. These factors are (1) the growing population including expatriates, (2) the establishment of new businesses; public and private, (3) the continuously decreasing prices of air conditioning with the technological advancements, and finally (4) the year round hot climate. Households and businesses The continuous formation of new households, private business enterprises, new governmental and private buildings (including schools and mosques) and other governmental and private establishments (including hospitals and other small-medium sized facilities) creates a large demand for air conditioners and other related equipment. The other driving demand factor is the replacement of aging air conditioning units that are either irreparable or not functioning as needed.
TABLE 1 - Saudi Arabian Local Demand 2008 Units Fresh Household Demand 532,000 205,000 2,420,000 Total Demand 3,157,000 Fresh Business Demand Replacement Demand
GRAPH 1 - Domestic production capacity By Type - 2008
Central Air Conditioning 2% Desert Coolers 6%
Split Units 18%
Window Units 74%
There are fifteen factories scattered across various regions of the kingdom producing air conditioners for the local and international markets. These local factories have high production capacities, catering largely to the national demand with around 65% of the market, as 35% of the market demand is met by imports of externally manufactured air conditioners. In 2008, the domestic demand for all types of air conditioning units, excluding commercial, was estimated to have increased by 2.71% to 2.58 million units, and is forecasted to increase by another 2.64% to 2.65 million units by the end of 2009. In addition, Saudi Arabia exported approximately 1.2 million units to the regional and international markets in 2008, with similar numbers expected for 2009.
The main reason households (and businesses) keep growing and forming in the kingdom is because of the steady increase of the local and expatriate population. Over the last few years, the average growth rate of the Kingdoms population was 2.45% per annum; leading to unintended increase in demand of air conditioning units per capita. This, in turn, contributes to an overall larger demand for air conditioning units. On the business side, with the Saudi economy continuously growing, new businesses continue opening to cater for the increasing demand on goods and services; translating into higher sales for businesses all around. Technology and prices The fast paced technological advancements in all industrial sectors, including the air conditioning industry, is allowing producers to cut down production time, reduce inputs, and most importantly increase quality of production. As a result, units now last longer, need less space and maintenance, and cost less to the manufacturer which translates to lower prices to the end user. In 2001, the average price of an air conditioner was SAR 1,670 regardless of power and type; in 2009 the average price of an air conditioner with the same criteria as
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before costs SAR 1,200, a decrease of SAR 470. On top of the price reduction, every air conditioner produced is now CFC free, and environmentally friendly; not disrupting either the world ecosystem or the ozone layer, which used to be a global concern in this industry. These Green or environmentally friendly air conditioners are more widely available and easily installed, especially with the rising world temperatures. Market size by units The estimated population in Saudi Arabia as of late 2008 was around 27.6 million, including expatriates. Assuming a growth rate of 2.45% per annum, this means that the Saudi population will increase by a little over 676,000 persons this year creating an incremental demand of around 123,000 housing units, which in turn generates a fresh demand of a little over 532,000 various air conditioning units. While most commercial buildings and shopping centers use heavy-duty central air conditioning units, small private and public sector establishments' like mosques, convenient stores and others, typically use window or split units. The creation of new establishments is estimated to generate a fresh demand of approximately 205,000 units per year in the kingdom. Thus, the combined yearly incremental demand created by households and establishments in the kingdom is 0.737 million units. (Table 1 and Table 2)
TABLE 2 - Saudi Arabian Local Demand 2008 Value (SR Million) Fresh Household Demand Fresh Business Demand Replacement Demand Total Demand 638 246 2,904 3,788
existing air conditioners will be replaced. Therefore the total number of units replaced per year kingdom wide is 2.76 million. The estimated total market demand for air conditioners in the kingdom of Saudi Arabia for 2009 is 3.2 million units. This demand of air conditioning units is among the highest in the region as well as the world relative to the size of the Saudi Arabian population. Market size by value Assuming an average selling price of SR1,200 per unit, the overall market value of air-conditioners sold in the Kingdom is estimated at around SR 3.79 billion (Table 2). In addition, the combined market value of the related spare parts, equipment and commercial heavy duty type air-conditioners is estimated at SR1.1 billion each year. Thus, the overall market value of air-conditioners and related spare parts sold in the Kingdom is estimated
GRAPH 2 - Domestic Producers of Air
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Combined Total Capactiy 7% 15% Saudi Factory 35% Others National Factory 43%
Conditioners - 2008
Zamil Factory
The replacement of aging units constitutes the principle share of the market demand. Based on the total population of 27.6 million and an average household size of 5.5 members per family, the total number of households occupied as of late 2008 was estimated to be 5.02 million. Assuming there are 4.33 air conditioners on average per household, the approximate various units currently being used are 21.73 million units. As for the existing commercial or business establishments, the replacement market is around 1.20 million units with another 0.70 million units in government entities and 0.6 million units in large private or public establishments like hospitals and stores, giving a grand total of 2.5 million units. Putting all the numbers together, the existing stock of air conditioners, public and private, in the kingdom is 24.23 million units. Assuming the average life span of a unit is 10 years, implying that every year 10% of the
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at SR5.44 billion a year. As a percentage of Saudi Arabia's Manufacturing sector, the air conditioning industry constitutes around 5%, which reflects the importance and value this industry has to both the consumers and manufacturers. In value terms, the market is believed to be growing at around 3.5% to 5% a year even though prices are under continuous pressure to decrease due to innovations, new technologies and more recently due to fierce competition from the Far East, with their very low prices. Local Market Production Leading the industry with the largest operating plant in the Kingdom, Zamil Air Conditioners has an installed capacity of 1.35 million units, representing nearly 42% of the total installed capacity in the kingdom. The second largest local producer is the National Factory of AirConditioners, having a total installed capacity of 1.082 million units (35% of total market installed capacity),
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GRAPH 3 - The Composition of Saudi Imports of Air Conditioners - by Units - 2008
Wall Air Conditioners 70%
Other Selfcontained Wall units 1%
Feron A/C's 28% Others
Imports Over the time period from 1997-2001 the air conditioning imports have steadily been rising. However, since 2002 imports of air conditioners have accelerated, rising from nearly 500,000 units to over 1.6 million units in 2006. The main increase was in the window air conditioners, because of their easy maintenance, and more importantly their relatively low prices. It is also noticeable that there was a large jump in the importing of central air conditioning units. This indicates that many businesses have opted to install one main central air conditioning unit rather than multiple window or split units. (Graph 3, Graph 4 and Graph 5)
GRAPH 5 - Saudi Imports of Air Conditioners by Number,
Units (Thousand)
produces 801,000 window type units, 250,000 split units, and the remaining production is between desert coolers and small central units. Locally produced air conditioners of foreign brands consist of Carrier, Gibson, York, and Falcon. Saudi Air Conditioners Factory, owned by Al-Juffali Brothers, has a total operating capacity of 484,000 units (Carrier brand), consisting of 450,000 window-type units, 9,000 central units and 25,000 split units. The local industry has been active in developing compact and lightweight models and split-type units in line with the trends of domestic demand. Besides the local producers, there are a number of importing agents, wholesalers and retail distributors in the air-conditioning market. (Graph 1 and Graph 2)
GRAPH 4 - The Composition of Saudi Imports of Air Conditioners - by Value - 2008
Others 3%
1997-2008
1,800 1,600 1,400 1,200 1,000 800 600 400 200 0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Feron A/C's 32%
Other Selfcontained Wall units 2%
Wall Air Conditioners 63%
Exports The exports, on the other hand, have fluctuated over the years, but went well beyond a million units in 2007, and edged very close to it within the preliminary results for 2008. These statistics indicate that over time both imports and exports have been on the rise. Saudi Arabia currently has a custom union with the Gulf Cooperation Council (GCC), allowing the trading of products to be an easy and quick transaction due to the lack of restrictions and obstacles, like currency and language; which is usually an issue with overseas traders. This is why most of the exports of air conditioning units are
GRAPH 6 - Composition of Saudi Exports of Air Conditioners
Others 9% Feron A/C's 10%
- by Units - 2008
Import/Export statistics The market of imports/exports for the air conditioning industry is one in which the kingdom is trying to achieve the ultimate goal of being completely self sufficient. Currently, these statistics have been fluctuating, however the general trend is exports have been on a slow rise, and imports on a slow fall.
Wall Air Conditioners 37%
Other Selfcontained Wall units 44%
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directed to neighboring countries including Kuwait and United Arab Emirates. (Graph 6, Graph 7 and Graph 8)
GRAPH 7 - Composition of Saudi Exports of Air Conditioners - by Value - 2008
Others 7% Feron A/C's 13% Wall Air Conditioners 34%
Impact of Saudi Accession to the WTO In December 2005, Saudi Arabia finally joined the World Trade Organization (WTO) after twelve years of discussions for full compliance with WTO rules, regulations and procedures. Before joining the WTO, the air conditioning manufacturers were protected by an import tariff of 12%, which was lowered to 5% just before Saudi Arabia was finally accepted into the WTO. There was a fear that this tariff reduction would induce dumping from the Far East and therefore cripple the local manufacturers’ ability to compete with the potentially low prices. Imports did initially increase from 2005 till 2006, but local producers proved to be sturdier than expected as high quality products of the local manufacturers, they prevailed in 2007, however imports increased again by a sizable amount in 2008.
Other Selfcontained Wall units 46%
Net Imports Looking at these values as ratios, we can see that the net imports-exports have been fluctuating despite continually rising domestic production. In 2008 the imports increased dramatically relative to 2007, but according to early projections for 2009, the imports will decrease relative to 2008 but not as low as 2007. With no doubt, air-conditioning is one of the success manufacturing stories in the kingdom. Its success is the result of the adoption of efficient import substitution in the realm of sound exchange rate policy along with the provision of public goods such as physical infrastructure and subsidized energy prices. Meanwhile reduced import tariffs coupled with robust economic growth over the period 2003-2008, produced a strong demand response, consequently increasing the level of net-imports. To catch up with rising demand, further investment is needed to enhance the local production capacity, with lesser reliance on government privileges and funding facilities. (Graph 9)
GRAPH 8 - Saudi Exports of Air Conditioners by Number,
Units (Thousand) 1,400 1,200 1,000 800 600 400 200 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
GRAPH 9 - Saudi Net Import/Export of Air Conditioners
Unit (Thousand)
by Number
1,000 800 600 400 200 0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
-200 -400
Future outlook: 2009 and beyond In 3Q2008, the global economy reached uncharted waters. The whole world went into a downward spiral with world stocks sinking to new unseen lows. Saudi Arabia is one of the few countries that were less affected by what was hitting the rest of the world. The prime source of Saudi Arabian income is from oil sales, and even with the barrel dropping to the low $40's, government projects and spending still took place. The private sector was also not severely affected because the main importers of Saudi Arabian air conditioners are neighboring countries that are in the same boat; i.e. money rich countries where public spending has remained strong. Nevertheless, forecasts for 2009 show that the Saudi Arabian air conditioning market will not be dramatically affected by the world economic crisis, and will actually start rising and going up again by the end of 2009 beginning 2010. These numbers are expected to increase with the uninterrupted growth of the Non-Oil GDP through government expenditure on infra-structure and
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1997-2008
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economic cities as well as mosques, schools and government buildings. With the continuously growing Saudi population and the expatriates arriving for work, by 2020, the population is estimated to be 36.74 million, with 7.1 million households occupied, using approximately 35 million air conditioning units. (Table 3)
TABLE 3 - Saudi Arabian Future Demand Year Fresh Household Demand Fresh Business Demand Replacement Demand Total Demand 2010 558,000 213,000 2,540,000 3,311,000 2015 630,000 235,000 2,870,000 3,735,000 2020 711,000 260,000 3,240,000 4,211,000
Conclusion Saudi Arabia is a country changing in many aspects, however the geographical fact remains that it is a very hot country especially during the summer season. This is why; the demand of air conditioning units -regardless of type- will continue to be available to all individuals in the society. The demand for air conditioners is relatively inelastic; because even if prices rise sharply, the demand will affect the purchasing of new units, however there will be noticeable growth in the spare parts and related equipment market. As the Saudi population continues to be growing while the number of members per family keeps on decreasing gradually, the number of occupied households keeps on increasing. As a result the average number of air conditioning units per household will assume a rising trend. Therefore the air conditioning sector is one that will never go out of business, as long as the local manufacturers keep on producing high quality CFC free units at competitive prices and they will continue to dominate the market even with the huge influx of foreign brands. On the technological front, the one main change is the fact that the local manufacturers are now heading towards producing more split units rather than window units due to their quiet nature, and powerful cooling capability as compared to the loud and relatively inefficient window units.
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Factory Name Saudi Air Condition Factory National Factory For Air Conditions Arab Gulf Factory For Air Conditioners and Heaters Al-Kawthar Factory Zamil Air Condition Factory Zamil Air Condition Factory and Home Appliances Al-Nisr Desert Coolers Factory ZamZam Air Condition Factory Hawk Island Factory for Air Conditions and Refrigerators - Makkah Hawk Island Factory for Air Conditions and Refrigerators - Riyadh Hawk Island Factory for Air Conditions and Refrigerators - Bareedah Al-Raha Air Condition Factory Al-Waha Air Condition Factory Al-Jazeerah Factory for Air Conditions and Refrigerators Desert Hawk Coolers TOTAL
Window Units 450,000 801,000 0 0 0 1,000,000 0 4,000 0 0 0 0 0 40,000 0 2,295,000
Split Units 25,000 250,000 0 0 0 300,000 0 0 0 0 0 0 0 0 0 575,000
Central Air Conditioning 9,000 1,000 0 0 0 50,000 0 0 0 0 0 0 0 0 0 60,000
Desert Coolers 0 30,000 1,500 5,000 0 0 14,000 4,000 15,000 5,000 5,000 20,000 50,000 40,000 8,000 197,500
Combined Total Capactiy 484,000 1,082,000 1,500 5,000 0 1,350,000 14,000 8,000 15,000 5,000 5,000 20,000 50,000 80,000 8,000 3,127,500
Saudi Imports of Air Conditioners by Value, 1997-2008
Value (Thousand)
1,600 1,400 1,200 1,000 800 600 400 200 0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Saudi Exports of Air Conditioners by Value, 1997-2008
Value (Thousand)
1,400 1,200 1,000 800 600 400 200 0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
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Imports AC Product Type Wall Air Conditioners Other Self-contained Wall units Central Feron Air Conditioners Other Feron Air Conditioners, Refrigeration Other Air Conditioners, Ref, and Rev valve Other Feron Central Air Conditioners Other Feron Air Conditioners with Refrigeration Other Air Conditioners with Refrigeration unit Central Feron Air Conditioners without refrigeration Other Feron Air Conditioners, without Refrigeration Other Air Conditioners without Refrigeration unit Total Change(%) Imports AC Product Type Wall Air Conditioners Other Self-contained Wall units Central Feron Air Conditioners Other Feron Air Conditioners, Refrigeration Other Air Conditioners, Ref, and Rev valve Other Feron Central Air Conditioners Other Feron Air Conditioners with Refrigeration Other Air Conditioners with Refrigeration unit Central Feron Air Conditioners without refrigeration Other Feron Air Conditioners, without Refrigeration Other Air Conditioners without Refrigeration unit Total Change(%) 1997 124,600 16,600 43,100 8,000 43,800 28,400 7,200 64,500 25,100 6,000 9,500 376,800 1998 124,900 17,800 58,800 22,700 28,600 52,400 2,300 23,300 37,000 4,600 11,600 384,000 1.91% 1999 160,879 20,551 54,700 13,300 22,500 35,500 3,700 24,600 28,100 3,700 13,500 381,030 -0.77% 2000 190,200 54,156 117,800 18,100 30,300 31,900 4,600 26,500 39,500 2,700 18,700 534,456 40.27% 2001 165,087 89,808 85,151 11,317 42,919 21,090 6,586 24,801 36,085 3,667 8,817 495,328 -7.32% 2002 171,600 91,700 86,900 10,600 48,600 17,800 8,800 26,700 32,100 3,356 21,800 519,956 4.97% 1997 72,716 18,556 13,892 3,601 15,071 4,897 3,196 28,294 9,297 1,728 3,884 175,132 1998 65,498 7,149 21,650 9,437 10,329 15,040 771 10,295 13,230 2,534 12,762 168,695 -3.68% 1999 83,543 37,149 29,733 5,994 10,703 32,275 2,956 12,757 29,850 2,513 7,786 255,259 51.31% 2000 168,544 157,855 46,436 13,463 24,008 6,850 12,602 21,157 16,560 1,176 23,316 491,967 92.73% 2001 215,000 175,000 50,000 15,482 27,609 7,878 14,491 15,000 15,000 1,340 23,200 560,000 13.83% 2002 185,000 143,000 45,000 14,000 25,000 5,000 12,000 13,000 13,000 1,200 17,000 473,200 -15.50%
Units 2003 628,951 15,125 48,631 34,648 25,539 174,626 24,718 2,523 47,776 8,244 21,172 1,031,953 118.08% Value 2003 662,223 19,123 59,896 51,867 40,606 33,918 34,984 11,853 67,993 13,393 16,439 1,012,295 94.69% 2004 763,979 10,085 68,206 32,014 20,567 25,980 27,656 10,726 87,506 9,494 20,461 1,076,674 6.36% 2005 758,220 14,680 125,611 54,684 10,939 17,336 23,868 3,698 100,998 12,780 17,381 1,140,195 5.90% 2006 819,189 12,383 131,196 26,731 15,753 68,740 66,968 7,212 183,150 11,137 17,052 1,359,511 19.23% 2007 788,705 35,579 108,338 14,074 13,346 37,352 11,898 5,455 142,074 11,959 17,217 1,185,995 -12.76% 2008 803,947 23,981 119,767 20,403 14,550 53,046 39,433 6,334 162,612 11,548 17,134 1,272,753 7.32% 2004 1,023,938 10,469 65,627 15,664 1,143 9,094 32,050 5,781 98,852 4,990 5,162 1,272,770 23.34% 2005 946,673 8,583 136,656 42,848 1,540 121,063 37,717 9,280 115,979 8,884 9,095 1,438,318 13.01% 2006 1,046,118 11,392 152,367 28,815 9,407 50,851 117,397 5,861 96,555 7,373 5,003 1,531,140 6.45% 2007 996,396 17,752 144,512 12,432 5,474 85,957 3,863 7,571 106,267 8,128 7,049 1,395,400 -8.87% 2008 1,021,257 14,572 148,439 20,624 7,441 68,404 60,630 6,716 101,411 7,751 6,026 1,463,270 4.86%
Exports AC Product Type Wall Air Conditioners Other Self-contained Wall units Central Feron Air Conditioners Other Feron Air Conditioners, Refrigeration Other Air Conditioners, Ref, and Rev valve Other Feron Central Air Conditioners Other Feron Air Conditioners with Refrigeration Other Air Conditioners with Refrigeration unit Central Feron Air Conditioners without refrigeration Other Feron Air Conditioners, without Refrigeration Other Air Conditioners without Refrigeration unit Total Change% Exports AC Product Type Wall Air Conditioners Other Self-contained Wall units Central Feron Air Conditioners Other Feron Air Conditioners, Refrigeration Other Air Conditioners, Ref, and Rev valve Other Feron Central Air Conditioners Other Feron Air Conditioners with Refrigeration Other Air Conditioners with Refrigeration unit Central Feron Air Conditioners without refrigeration Other Feron Air Conditioners, without Refrigeration Other Air Conditioners without Refrigeration unit Total Change% 1997 324,900 6,900 6,100 600 8,000 13,400 600 10,100 800 3,600 5,700 380,700 1998 364,899 11,488 1,545 477 5,873 11,891 409 843 4,999 2,818 3,184 408,426 7.28% 1999 256,488 5,465 2,687 3,411 271 7,234 913 780 4,244 862 1,703 284,058 -30.45% 2000 248,262 7,824 5,192 1,367 740 5,748 641 2,584 9,723 1,723 4,363 288,167 1.45% 2001 206,883 9,225 8,248 2,393 2,523 8,290 654 1,402 2,351 1,801 1,764 245,535 -14.79% 2002 1997 271,000 6,000 230 6,000 6,000 10,000 223 11,000 1,000 2,000 3,000 316,453 1998 301,000 10,000 1,000 4,500 5,000 9,000 12,112 1,000 3,000 2,000 3,000 351,612 11.11% 1999 273,000 5,000 1,000 3,000 5,500 11,000 24,000 1,000 6,000 1,000 2,000 332,500 -5.44% 2000 229,773 7,196 1,517 1,302 987 4,269 12,112 5,635 9,031 1,069 9,895 282,786 -14.95% 2001 208,660 10,395 3,785 1,339 2,519 4,202 16,074 2,545 1,222 1,356 2,823 254,921 -9.85% 2002
Units 2003 401,958 26,866 25,057 966 4,396 13,673 4,352 3,673 5,920 2,136 15,408 504,405 83.38% 2004 593,192 180,085 14,927 1,031 26,443 9,198 17,335 4,188 5,202 2,879 17,310 871,790 72.84% 2005 497,575 103,476 19,992 999 15,420 11,436 10,844 3,931 5,561 2,508 16,359 688,098 -21.07% 2006 267,368 297,753 10,696 9,746 32,008 2,629 8,411 41,455 35,502 15,715 36,365 757,648 10.11% 2007 452,712 546,939 15,205 55,030 24,624 7,754 15,806 16,525 15,422 3,033 23,345 1,176,393 55.27% 2008 360,040 422,346 12,951 32,388 28,316 5,192 12,109 28,990 25,462 9,374 29,855 967,021 -17.80%
225,000 9,200 1,400 1,350 1,050 4,260 17,395 3,500 7,500 900 3,500 275,055 7.90% Value
2003 374,387 14,987 27,800 1,421 6,134 20,751 6,020 9,216 5,252 2,596 13,857 482,421 62.86%
2004 464,578 32,228 25,684 1,233 23,733 9,799 7,572 2,944 6,449 2,010 6,557 582,787 20.80%
2005 419,483 23,608 26,742 1,327 14,934 15,275 6,796 6,080 5,851 2,303 10,207 532,604 -8.61%
2006 238,136 248,226 28,337 6,999 26,638 11,486 23,445 34,357 19,602 1,188 13,440 651,854 22.39%
2007 374,066 600,574 26,921 58,366 21,768 12,187 25,166 14,460 10,634 4,650 10,068 1,158,860 77.78%
2008 306,101 424,400 27,629 32,683 24,203 11,836 24,306 24,409 15,118 2,919 11,754 905,357 -21.88%
255,000 8,300 5,192 1,367 740 5,748 736 3,500 9,200 1,743 4,700 296,226 20.65%
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NCB Economics Department
The Economics Department Research Team
Head of Research
Said A. Al Shaikh, PhD Chief Economist [email protected]
Sector Analysis/Saudi Arabia
Muhammad Y. Malick Senior Economist [email protected] Zulfiqar Bashir, PhD Senior Economist [email protected] Mohamad Jomaa Economist [email protected]
Macroeconomic Analysis
Perihan Al-Husseini Senior Economist [email protected] Tamer El Zayat Senior Economist [email protected] Dana Nammari Economist [email protected]
Management Information System
Majed Al Ghalib MIS Specialist [email protected]
Disclaimer: The information and opinions in this research report were prepared by NCB’s Economics Department. The information herein is believed by NCB to be reliable and has been obtained from public sources believed to be reliable. However, NCB makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this report constitute the current judgment of the author/authors as of the date of this report. They do not necessarily reflect the opinions of NCB as to the subject matter thereof. This report is provided for general informational purposes only and is not to be construed as advice to investors or an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or other securities or to participate in any particular trading strategy in any jurisdiction or as an advertisement of any financial instruments or other securities. This report may not be reproduced, distributed or published by any person for any purpose without NCB’s prior written consent. To be added to the NCB Economics Department Distribution List Please contact: Mr. Noel Rotap Tel.: +966-2-646-3232 Fax: +966-2-644-9783 Email: [email protected]
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