As the energy consumption augmented, "environmental awareness" and "efficient energy use" have been trending topics in Turkey. Therefore,
Turkish insulation sector has become prominent in recent years.
According to data provided by IZODER, total consumption of thermal insulation materials in Turkey has increased by 18% to
14,2 million cubic meters. Turkish insulation industry displayed a 18,5% CAGR
between 2008-2012 yet the market is still undersaturated.
Moreover, 85% of buildings in Turkey remain uninsulated
whereas this figure is around 40% in Europe. Per capita insulation demand in
Turkey is circa 0,19 cubic meters, which is also far below than Europe and United States.
Thermal Insulation Materials Demand in Turkey 2006- 2012
Source: IZODER (Association of Thermal Insulation,
Waterproofing, Sound Insulation and Fireproofing Material Producers, Suppliers
and Applicators)
Since 2007, expanded polystyrene (EPS) has been the most
coveted thermal insulation material in Turkey and achieved 23% growth last
year. On the other hand, glasswool and
extruded polystyrene (XPS)
demand increased by 12% and 5%, but still lower than overall
market growth.
Majority of the manufacturers serve the domestic market as
the current export capacity remains limited. With incoming investments leading
to improved capacity, insulation companies in Turkey will most likely be
seizing the opportunities in the neighbouring emerging markets.
Speaking of investments, Turkish insulation industry has
witnessed many mergers and acquisitions so far, mostly from strategic investors
as mentioned below. Yet there are still viable options to consider for both
strategic and financial investors.
Notable Cross-border M&A deals in Turkish insulation sector
In addition to cross-border M&A in Turkey, there has also been other foreign investments in the sector. For instance, Austrian insulation producer Austrotherm recently opened its second insulation plant in Izmir, which also indicates the growing interest and strong confidence in Turkish insulation industry.
Record levels are expected within the next decade
Despite 18% growth in the sector, there's still ample
room for growth considering the following circumstances.
First of all, Kyoto Protocol has become obligatory for
Turkey as of 2012 resulting in investment necessity for
reducing greenhouse gas (GHG) emissions, in other words a significant
increase in thermal insulation demand. Likewise, several standards (TS 825)
and regulations (Building Energy Performance) were put into force by Turkish
government in order to maintain
energy efficiency while complying with Kyoto emissions target.
Besides, ongoing urban transformation project will have a
great impact on Turkish insulation industry. In the wake of the project, 6,5
million residential units that face earthquake risk will be rebuilt in
accordance with current insulation standards. According to insulation
professionals, thermal insulation VAT reduction and transaction tax exemption for insulation
loans are expected to take place in the foreseeable future.
In short, the significant growth in Turkish construction
sector will continue to draw great deal of attention to insulation industry from
both local and foreign investor owing to Turkey’s emerging nature and
forthcoming infrastructure projects.
Moreover, the country’s proximity to other fast-growing
construction markets such as Russia and the Middle East is another reason for
preference. With increasing awareness of insulation and favorable government
policies, it is reasonable to expect a significantly higher M&A activity in
Turkish insulation sector within the next decade.
Hopefully, those transactions will create efficiency and
sustainability for both parties, just like the industry provides to its
customers.
