News Column

SPOTLIGHT

May 27, 2014



The competitive landscape of contributing to this market growth is the segment of the industry, with more the global heating, ventilation and air conditioning (HVAC) industry has remained unchanged for the last six years. Changing weather conditions, development in air conditioning technology, rising disposable income of the consumers in the developing regions like Asia Pacific, demand for energy efficient models and replacement need in the developed regions such as North America and Europe are driving the air conditioning systems market worldwide.

TechNavio's analysts forecast the Global Air Conditioning market to grow at a CAGR of 5.18 per cent over the period 2012-2016. One of the key factors increase in construction activities. The global air conditioning market has also been witnessing the increased use of green technology and removable energy sources. However, the Capital Intensive market could pose a challenge to the growth of this market. TechNavio's report, Global Air Conditioning Market 2012-2016, has been prepared based on an in-depth market analysis with inputs from industry experts.

According to a recent research report by Lucintel, the industry is expected to reach an estimated $95bn in 2018. The report said that Asia Pacific (APAC) - as expected - dominates this industry. Commercial HVAC equipment is major than 50 per cent of the market share. Lucintel's report also gives a brief overview of the industry challenges. Increasingly warmer global temperatures are affecting the industry. The global HVAC industry is capital intensive, and with the economy experiencing downturn globally, it is a challenge for many HVAC equipment manufacturers to invest heavily in the industry. Although the middle class population is projecting healthy growth across the world, still the economic condition is preventing many of them from buying domestic HVAC equipment such as air conditioners. Increasing construction activities are mainly responsible for driving growth in the industry. Global sales of homes and new buildings have increased, favouring the industry as sales of HVAC equipment is highly correlated to the construction of new homes and buildings. Availability of easy financing supports the growth of HVAC equipment sales. Residential HVAC equipment is the key growth segment now, driven by increasing residential construction and product penetration.

Fantech - the company which has been researching, designing and bringing to market 'ventilation solutions' that ensure better indoor air quality, recently announced that it has launched a rebrand of its company. The rebrand initiative includes a new visual identity and a new tagline: simply better. The company's new logo and typeface set it apart from competitors and reflect its unique blend of sophistication, efficiency, and friendliness.

While Fantech is undergoing a shift, Tecumseh Products Company, a leading global manufacturer of compressors and related products, reported an operating loss of $5.4mn and a net loss of $8.4mn, or $0.45 per share, on net sales of $207.6mn for the quarter ended March 31, 2013. This compares with an operating loss of $5.9mn and a net loss of $7.1mn, or $0.38 per share, on net sales of $219.6mn for 2012.

Regal Beloit Corporation also reported financial results for the first quarter 2013. Net sales for the first quarter 2013 were $778.2mn compared to $807.9mn for the first quarter of 2012. Net Income for the first quarter 2013 was $50.7mn compared to $49.9mn for the first quarter of 2012. Diluted earnings per share for the first quarter 2013 were $1.09 compared to $1.16 for the first quarter of 2012, reflecting the higher share count. "In the first quarter of 2013, Regal's end markets were mixed. While the U.S. residential market grew in line with expectations, the U.S. commercial and industrial markets did not perform as well as we had expected earlier in the year. Our North American HVAC sales were up 3.5 per cent in the quarter and sales in our Unico business remained strong," said Regal Chairman and CEO Mark Gliebe. "In spite of the top line challenges the teams executed well on our synergy and simplification initiatives, allowing us to maintain operating margins," continued Mark Gliebe.

Lennox International Inc. however, has had a good start to 2013. Revenue for the first quarter was $668mn, up nine per cent from the prior-year quarter. Adjusted earnings per share from continuing operations was $0.33, up 74 per cent from $0.19 in the prior-year quarter. On a GAAP basis, earnings per share from continuing operations was $0.31, up 72 per cent from $0.18 in the prior-year quarter.

Breezair - Natural Cooling Solution

Breezair ACs are setting new standards in providing most economical cooling solution for a wide variety of industrial/commercial cooling applications

Breezair Air Conditioning units, the product of Seeley International, Australia were launched in the Sultanate during The Big Show 2013, under auspices of Muscat Electronics LLC, a leader in providing total air conditioning solutions in the Sultanate for a long span of time. All the products of Seeley offer superior performance with relentless efficiency. It is setting new standards in providing most economical cooling solution for a wide variety of industrial/commercial cooling applications.

It provides constant flow of cool fresh air in partially covered and ventilated places like factories, ware houses, commercial kitchens, restaurants, outdoor majlis, open kitchens, bus stops, workshops, garages etc. It brings down the temperature through its evaporative air conditioning technology wherein the cool breeze is created by hot air passing over water soaked cooling pads in the units. Natural evaporation helps soak up the heat and cools the hot air.

Breezair consumes approx. 80% less energy than the conventional air conditioning system and works effectively even when the doors and windows are open. Besides, since the cooling is natural, no harmful gases are emitted from it unlike the conventional air conditioners, which pollute the environment without our knowledge. The system is absolutely Environment and Human friendly.

Owing to 100% freshness, toxic fumes and airborne dust is flushed out which improves the health and safety conditions. The productivity of the employees is found to be steadily on the increase while keeping the temperatures in check especially in hi-temperature areas.

Breezair natural air cooling system costs almost same as the Mechanical Ventilation Systems and at the same time cools and ventilates at a lower running cost. Being lightweight, no special frame for support is required. They are supported solely by ducts, which make it easy and cost effective to install.

Seeley International has been marketing their products in 70 countries. Apart from offering customized cooling solutions, which help save precious energy and money, the organization is also committed to sourcing the most innovative, customer friendly products from around the world.

First quarter 2013 revenue in the Residential Heating & Cooling business segment was $315mn, up 15 per cent from the prior-year quarter. Currency was neutral to revenue growth. Segment profit was $21mn, up 86 per cent from the prior-year quarter. Segment profit margin was 6.5 per cent, up 250 basis points. Results were primarily impacted by higher volume, favorable price, and lower material costs, with partial offsets from investments in distribution expansion, higher SG&A, and lower mix.

Revenue in the Commercial Heating & Cooling business segment was $163mn, up four per cent from the prior-year quarter. Currency was neutral to revenue growth. Segment profit was $11mn, up 34 per cent from the prior-year quarter. Segment profit margin was 6.8 per cent, up 150 basis points. Results were primarily impacted by higher volume, favorable price/mix, and lower material costs, with partial offsets from investments in distribution expansion and higher SG&A.

STEADY GROWTH FOR OMAN

The importance and size of the global commercial air conditioning (CAC) market has grown to prominence in recent years, gradually evading the shadow of the residential air conditioning (RAC) market. Such growth has not been limited by tempering market conditions in the traditional CAC strongholds of North America, Europe, and Middle East. With demand for CAC products accelerating in other parts of the world, other regions have now entered the fray.

However, Air conditioning is a necessity in the Middle East, given its geographical location, climatic conditions and the ever-evolving infrastructure. Massive construction drives which spurred the development of numerous residential and commercial real estate projects, and high population growth have fuelled demand for air-conditioners and cooling systems in the region. The region's annual commercial air conditioning (CAC) market volume is expected to reach approximately $4bn, a 35 per cent growth from 2010.

Regional construction boom and increasing investments from China have boosted the growth. Another factor is the 2022 Qatar World Cup, which has greatly increased construction in Qatar in preparation for the mega event in the region. This directly translates to a need for CAC in a region that experiences hot and humid conditions for most of the year.

The boom in real estate development together with the growing emphasis on greater cooling facilities and the resultant increase in power demand have all contributed to creating huge opportunities for manufactures and distributors in district cooling. This trend has received added impetus in recent years with the lack of sufficient generation, transmission and distribution infrastructure to meet projected power demands.

In Oman, the air-conditioner and refrigerator market account for a whopping 65 to 70 per cent of all business in the white goods market. The market size of air-conditioning products is around 200 K units a year in Oman. The market size for Refrigerators is around 80 K units a year. Also due to a very fertile commercial / industrial projects scenario, there is also a great business opportunity for different air- conditioning concepts like chiller, ducted type or DVM (Digital Variable Multi). Traditionally, the Sultanate has been a market for window ACs. That trend is rapidly changing as improved standards of living and more sophisticated lifestyles push customer preference to split and ducted air-conditioners.

This is in line with global trends. Apart from lifestyle changes and economic development, price reductions in split units have driven demand for these models of air-conditioners. What's more, the air-conditioner which was earlier regarded as a seasonal product now boasts decent sales figures even during off-season. In Oman extreme temperatures and high levels of humidity have spurred the demand for high quality, energy efficient, environment friendly and reliable cooling solutions. The Omani government, in keeping with these trends and demands, has established the highest standards in setting requirements for all new projects being developed for both the tourism and real estate sectors. In order to meet these requirements and to reduce the demand on the governments for energy the District Cooling solution has been developed and implemented throughout the country.

Daikin: Over 30 years of VRV

For modern building with sophisticated design, the VRV system offers advanced zoning capabilities, enhanced energy efficiency, space-saving design and reliability Muscat Electronics LLC (ME) the sole distributor of the Daikin brand of air-conditioners has over the years earned the trust of people of of Oman in air-conditioning solutions and for excellence in customer support services amongst others.

In order to elevate the level of high performance and to build a solution unlike any other, Daikin in 1982 developed the world's first variable refrigerant volume system (VRV) and a result of putting in strenuous efforts, VRV has over the past 30 years earned the reputation of being 'the intelligent air conditioning solution' for industrial, commercial and residential use.

For modern building with sophisticated design, the VRV system offers advanced zoning capabilities, enhanced energy efficiency, space-saving design and reliability. The VRV system maintains

a nearly constant room temperature without the typical temperature fluctuations. The remarkable features of VRV are:

Inverter compressor

Environment friendly R410A refrigerant Precise room temperature with

+/- 0.5C attainable

Inverter motor options for ducted

indoor units

Drain pump options for indoor units Fresh air solutions can be integrated

to VRV

Self diagnosis system for ease of maintenance

The new VRV III pushes the limits to deliver advanced solutions and even more flexibility for the engineered and design-build projects. It can provide building owners with vital data on energy consumption, system operating costs and many other operating and cost parame- ters. This air conditioning system provides outdoor units that extend air conditioning capacity up to 54 HP. The VRV III series provides the power and versatility you need for flexible design and easy installa- tion in large-sized buildings. The Heat Re- covery Series also enables simultaneous cooling and heating, meeting the various needs for temperature control.

The VRV III series has specially designed models for high outdoor temperatures, with an extensive capacity ranging from 8 to 36 HP. The unit can operate in adverse conditions where the temperature reaches as high as 52C. This series incorporates Daikin's latest technologies, including long piping and high external pressure, to meet the diverse needs of our customers.

ME has installed 4000 Nos. of VRV systems with R410A refrigerant which are working satisfactorily for the past eight years. The total installed capacity of R410 A VRV in Oman is above 25,000 TR.

Muscat Electronics has a highly skilled design team and very sophisticated service centre.

Bahwan Electronics - Toshiba VRF Systems

Toshiba VRF systems feature the advanced Super Modular Multi System [SMMS-i] technology that optimises room comfort even at high temperatures while at the same time reduces energy and maintenance cost.

Bahwan Electronics [BE] is focusing on leveraging the burgeoning demand for advanced air-conditioning systems in the Sultanate with the latest range of Variable Refrigerant Flow [VRF] air-conditioning units from Toshiba, which are increasingly used as an alternative to traditional water- based heating and cooling systems in commercial buildings, hospitals, restaurants and shopping malls. BE's VRF range includes Toshiba MiNi- Super Modular Multi System [SMMS], a small VRF system suitable for light commercial and residential applications, Toshiba SMMS, the most advanced heat pump system in the market and Toshiba SHRM, a 3-pipe VRF system that facilitates simultaneous heating and cooling to different zones or rooms.

Toshiba VRF systems feature the advanced Super Modular Multi System [SMMS-i] technology that optimises room comfort even at high temperatures while at the same time reduces energy and maintenance cost. Being the first and only manufacturer to manufacture "all inverter" outdoor units for the past ten years, Toshiba gives an eco-evolution edge to businesses.





A balancing act

Calculating cooling loads using conventional protocols instead of the casual 'rule of thumb' comes with numerous advantages and may prove beneficial to home owners in more ways than one Heating and cooling loads are the measure of energy needed to be added or removed from a space by the HVAC system to provide the desired level of comfort within a space. Right-sizing the HVAC system begins with an accurate understanding of the heating and cooling loads on a space. Right-sizing is selecting HVAC equipment and designing the air distribution system to meet the accurate predicted heating and cooling loads of the house. The values determined by the heating and cooling load calculation process will dictate the equipment selection and duct design to deliver conditioned air to the rooms of the house, right-sizing the HVAC system. The heating and cooling load calculation results will have a direct impact on first construction costs along with the operating energy efficiency, occupant comfort, indoor air quality, and building durability. An accurate evaluation of the heating and cooling loads requires a complete understanding and accounting of the building components that make up the thermal enclosure along with the outdoor/indoor contributions to the load. The load calculation for a house where the building enclosure has been enhanced with added air tightness strategies, better windows, and additional insulation will be more sensitive to manipulation of the inputs.

Historically, energy codes did not address stringent levels of energy efficiency, and rules of thumb were developed for HVAC sizing that worked based on the construction at that time. Building enclosures have become more and more energy efficient as energy codes have become more stringent since 2000, but these rules of thumb have not changed. Full credit should be taken by the HVAC system designer for improvements such as better windows, enhanced air tightness strategies, and additional insulation.

Many HVAC companies rely on the "400 square feet per tonne" rule for sizing systems. Even when a load calculation is required to be performed, the contractor may often manipulate the inputs to get a result that is close to the "400 square foot" rule of thumb. Overcoming this bias requires the builder and their trade base sharing an understanding of the importance of achieving the stated building enclosure specifications, and undertaking visual inspections and testing during construction to verify the building meets the intended level of performance. When these checks and balances are in place, the perceived need to add factors of safety during the heating and cooling load calculation process can be avoided.

Brand value

Panasonic being an extremely popular air conditioner across the Sultanate ensures OMASCO and their team's best service

OMASCO and Panasonic with their popular wide range of air conditioners offer excellent after sales support. In 2013, OMASCO sold over 130,000 units of Panasonic Split air conditioners.

OMASCO and Panasonic open the summer with an air conditioner technical seminar for range of Panasonic Air conditioners, which not only trains in-house technicians but also trains consultants and contractors technician. "OMASCO and Panasonic consider this practice integral," a spokesperson said.

Panasonic has always aimed at bringing out quality product, maximum efficiency and excellent after sales service. "With the upcoming launch of the Panasonic air conditioners, we have taken it into our stride to ensure that we train our entire technical team (internal and external) on the product with regard to features and on the technical aspects. This programme has intensive hands on trouble shooting experience which acts as a refresher course for previous models and a troubleshooting training for the entire range of Panasonic air conditioners." With this activity, we will enable the team to be able to trouble shoot and diagnose faults better, faster and with more accuracy cutting down drastically on complaint turnaround time. Alongside the above benefit, technicians are ready for service and installation of the range. Panasonic being an extremely popular air conditioner across the Sultanate ensures OMASCO and their team's best service at all times.

OMASCO and Panasonic aims at training over 800 technicians across the Sultanate every year since the past five years to maintain the high standard of Panasonic and to provide even better service to customers.




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Source: Oman Economic Review (OER)