In the furniture industry, revenue declined by 7% in value in 2023, following a stabilisation (-0.4%) in 2022, reaching 2.1 billion euros. The production volume decreased by 10.9%, while selling prices increased by 3.9%. From the beginning of 2023, there was already a significant revenue decline of -7.2% in the first quarter. Weak activity persisted throughout the year, culminating in an 8.2% revenue decline in the fourth quarter.
Photo: Fedustria.
Kitchen furniture is the only product group that managed to maintain its revenue (+0.8% in value), primarily due to a rise in selling prices by 8.6%. The production volume decreased by 7.8%. All other product groups within the furniture industry experienced both a decline in revenue and volume. Living room furniture saw a revenue decline of 5.3% in value and 10.8% in volume. Sales of office and shop furniture (-14.6% in value and -15.8% in volume) and mattresses and bases (-11.7% in value and -13.8% in volume) significantly declined, both in value and volume.
The increased selling prices result from the partial passing on of higher raw material, material, energy, and labour costs. Due to weak construction activity, demand remained low, with a similar situation on export markets.
Export and import of furniture decline
Belgium's furniture exports (including transit) decreased by 10.8% in 2023. 88.9% of furniture exports go to the EU market, where deliveries declined by 11.6%. Sales to France, the main export market with a share of 32.4%, and the Netherlands, the second main export market with 24.4%, dropped significantly by 23.7% and 11.1%, respectively. Deliveries to the German market, the third main customer with 19%, however, increased by 14.9%.
The United Kingdom lost its position as the main export market outside the EU (share 2.5%) to the United States (share of 2.9%), following an export increase to the American market by 13%; meanwhile, exports to the United Kingdom declined by 10.6%.
Furniture imports were 12.7% lower. The decline in imports from China continues (-8.1% in 2022 and -14.9% in 2023). However, China remains the main and highly dominant supplier of furniture to our market with a share of 26.4%. Dutch (share 15.9%) and German (share 12.7%) furniture imports decreased by 4.1% and 10.2%, respectively. Poland is the fourth main supplier with a share of 9.2% and maintained its deliveries (-0.7%).
Investments rise despite low capacity utilisation
The capacity utilisation rate of production decreased in 2023 to an average of 73.5%, the lowest level in 10 years (82.3% in 2022). However, this did not deter furniture companies from investing. Investments continued to rise, especially to meet sustainability requirements and circular economy initiatives, for the third consecutive year (+8% compared to 2022).
Employment declines
In 2023, there were 9,559 employees active in the furniture industry. Compared to 2022, this represents a decrease of 204 employees or 2.1% due to bankruptcies.
Outlook for 2024
After hitting a historic low in mid-2022 due to the energy crisis, both Belgian and European consumer confidence recovered in 2023. Belgian consumers indicated in the latest survey from March 2024 their intention to increase savings. However, a more positive sentiment does not immediately translate into more purchases.
Higher mortgage rates and increased prices made construction significantly more expensive. It is expected that construction activity will not recover in 2024 and may even decline slightly, which also affects the furniture industry. Fewer new buildings mean fewer new furnishings and interiors/exteriors, which typically come at the end of the construction process. It remains to be seen whether the European Central Bank will lower interest rates from the summer onwards and when this will be followed by a potential decrease in mortgage rates.
The business confidence index of the furniture industry, which reflects entrepreneurs' confidence and precedes actual economic activity by about 3 months, declined in March 2024 after an increase in January-February (gross curve). Therefore, there are still few signs of recovery in early 2024.
More information:
Fedustria
www.fedustria.be