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Business |

'UPS' and Downs in Backup Power Market

While it is customary to see sales decline in the first quarter of the new year as a result of the seasonal post-holiday slump, UPS sales were especially slow in 1Q 2012, resulting in only two percent growth in the global market year-over-year.

IMS Research recently reported that UPS hardware revenue growth continued to slow after a rather sluggish second half of 2011. While little growth isn’t too surprising given the state of the global economy, the fact that large-system UPS sales dropped two percent year-over-year this quarter only provides further evidence of the struggles that the market will face in 2012. After a rather upbeat beginning to 2011 in UPS sales, Western Europe still faced a struggling economy and overly cautious consumers because of the unresolved economic problems of Greece, Spain and Portugal. As a result, the region’s sales began dropping off as early as 3Q 2011 and continued to shrink in the first quarter 2012. Single-phase sales fell five percent and the >100kVA market contracted more than 15 percent year-over-year. IMS Research’s Senior Analyst Lori Lewis, explains: “The ongoing struggle in Western Europe has really forced many in the region to restrain from making any kind of large financial decisions and to suspend purchasing new UPS. What’s even more troubling is that the market doesn’t appear to be turning around any time soon without any kind of resolution on the underlying economy. Adding further to the woes of Europe, Middle East and Africa (EMEA), the emerging markets in both Africa and the Middle East, where hopes of UPS market growth were high, also fell short of seeing growth in 2011 over 2010.” After experiencing a less-than-average five percent year-over-year growth in 4Q 2011, Asia’s sales continued to remain slow in 2012 with just under nine percent growth year-over-year in the first quarter. China’s struggles intensified as interest rates climbed and lending froze; resulting in declining >100 kVA UPS sales. Lewis reveals: “The Chinese Government’s attempt to control an overheating economy by raising interest rates came at a time when the global economy was cooling off as pre-recession pent-up demand was satisfied. Slowing exports to Europe combined with the difficulties securing the financing needed for businesses to buy equipment had a dramatic impact on China’s growth. Now, China is dealing with slowing exports and limited growth to internal consumption that is needed to keep the country’s GDP growing.” Japan’s growth also slowed after experiencing a dramatic pick-up in the single-phase market shortly after the tsunami in March 2011 hit. Meanwhile, other regions dependent on China have also felt the impact of China’s increased labor costs and slowing economy with little growth as well. With economic struggles of its own, the United States has managed to keep sales moving in the positive direction at just under five percent year-over-year growth in 1Q 2012. The 10-100kVA range contributed to most of this, thought to be the result of increased demand for digitizing everything from programs and processes to information once available only as hard copy. The >100kVA market remained steady continuing to pick up data-center projects; while the single-phase UPS sales remained flat. Further emphasizing the state of the economy, Brazil’s rapid growth even simmered down after its tremendous 2010. Even though a slowdown was expected because of worries from oversaturating the market, the five percent annual growth seen in 2011 was anything but impressive for this promising BRIC country. “Ever since the recession hit, the UPS market has been on a roller-coaster ride of ups and downs,” states Lewis. “After making the climb to recovery in 2010 and part of 2011, sales have unfortunately headed back downhill and are forecasted to stay on that path until the issues weighing on Europe, China, and the U.S. are resolved.” With two consecutive quarters of slow-to-no growth, the UPS hardware market will to continue to struggle for much of 2012. ----- Source: IMS Research

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March 21 2024 8:48 am V22.4.9-2
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