Orders from the residential construction segment represent the largest share of revenue generated by companies applying protective coatings in Poland. The decision what brand of protective coating product to choose for a project is most often taken by the contractor or subcontractor. The wholesalers are the main place to buy protective coatings as over half of the surveyed renovation and construction companies choose this distribution channel, according to PMR’s latest report “The protective coatings market in Poland 2016 – Market analysis and development forecasts for 2016-2021”.
For the needs of the report, PMR conducted a survey of over 300 renovation and construction companies which use protective coatings in their activities. In this group, the largest number of companies apply protective coatings on concrete structures (56 percent) and wood floors (55 percent), while products dedicated to metal surfaces were used by 47 percent of the respondents.
Companies specialised in producing protective coatings for wood floors and concrete receive the largest number of orders from individual customers, while companies focused on projects involving the use of protective coatings for metal mostly rely on orders from private firms and state-owned companies. It should be noted here that private individuals tend to hire small renovation and construction companies. Regarding companies with 10 or more employees, private firms, state-owned companies and general contractors represent the largest shares in their order books.
Projects in the residential construction segment represent the main source of revenue for the surveyed companies regardless of business specialisation, with a proviso that residential construction jobs have the greatest significance to companies focusing on protective coatings for wood floors. Companies specialised in protective coating products for metal surfaces are characterised by the greatest diversification of orders. It should be added here that while projects in the residential construction segment represent the highest value of orders for companies employing up to nine people, civil engineering construction is the main source of orders for companies with at least 10 workers.
The wholesalers are the main place to buy protective coatings as over half of the surveyed renovation and construction companies choose this distribution channel (in particular those whose activities are focused on protective coatings for concrete and metal). However, it should be noted that the popularity of this distribution channel decreased significantly over the last two years.
Almost two-thirds of the surveyed companies purchase protective coating products from local distributors (this distribution channel is of particular import to the smallest companies), while over one-fifth of the companies purchase the products they need directly from the manufacturers (high popularity of the channel among the largest companies). The respective shares were significantly higher than in 2014 when a similar survey was conducted.
In the period under review, DIY stores saw their market share fall – one out of every eight renovation and construction companies (in particular the smaller ones) purchase protective coatings through this channel.
The main reasons to choose wholesalers, local distributors or DIY stores remain the same – the choice of place is determined by prices, a wide range of available products and a convenient location. Companies purchasing directly from manufacturers are, as a matter of fact, driven by a single major factor – favourable prices, as indicated by over two-thirds of the surveyed companies.
The decision what brand of protective coating to choose is generally taken by the contractor or subcontractor (in particular in the case of companies specialised in protective coating products for wood floors). Moreover, even when a brand is pre-defined in the plan, the contractor or subcontractor can suggest an alternative solution.
The solution’s durability is the key feature of protective coatings which determines what product is selected by the contractors. Other important factors also include the price, the ease of application as well as the drying time and the appearance of the coated surface. Interestingly, companies appear to attach relatively little significance to the brand name of the product.
A vast majority of renovation and construction companies using protective coatings (84 percent) reported a net profit for 2015. Over 90 percent of companies with more than five employees posted a profit.
The average gross margin earned by companies specialised in laying protective coatings is 22 percent, up by 2 percentage points from 2014. Interestingly, high-margin projects are generally completed by small-sized companies with up to five employees (average gross margin of 26 percent compared to 12 percent registered by companies with 10 or more workers).
Moreover, the companies have optimistic expectations regarding the next 12 months. Almost half of the respondents (45 percent) expect an increased demand for their services (companies specialised in protective coatings for concrete are the most upbeat), while a mere 11 percent of the respondents project a decline in demand for the services they provide.