External influencing factors

Economic influencing factors

NORMA Group is active in many different industries and regions. Seasonal and economic fluctuations in individual countries or industries can therefore have an impact on customer demand and on NORMA Group’s order situation. At the same time, NORMA Group is less susceptible to temporary declines in demand in individual industries or countries thanks to its diversified product portfolio and broad customer base.

² Prior year's figures have not been adjusted; instead, key figures include continuing operations and the discontinued operation. Therefore, a comparison with the previous year is only possible to a limited extent.

Global economy 2025: lots of headwinds and only moderate momentum

2025 was largely shaped by Donald Trump’s return to the US presidency and his distinctive political style. The wars in Ukraine and Gaza also continued to influence economic development. Overall, the world was in a state of accelerated upheaval, which put a strain on the existing economic order and geopolitical stability. A high level of uncertainty hampered a sustainable recovery of the global economy. The restrictive and erratic US tariff policy in particular had a negative impact. The unpredictable line taken by the US government led to a loss of confidence, causing the US dollar to depreciate significantly against the euro, among other currencies. The financial markets, on the other hand, proved resilient. Energy costs fell and inflationary pressure eased noticeably. Major central banks continued their expansive monetary policy and lowered interest rates. Artificial intelligence (AI) became a driver of investment and industrial production in 2025, particularly in the USA and Southeast Asia. In this environment, the global economy grew by 3.3% in 2025 according to data from the International Monetary Fund (IMF) and thus once again only modestly. The main reason for this was the subdued development of the industrialized countries (+1.7%), while the emerging and developing countries grew dynamically by +4.4%.

Asia acted as the engine of the global economy in 2025, even if the pace of expansion in China slowed over the course of the year. Nevertheless, China’s foreign trade remained buoyant, as lower exports to the US were offset by exports to other regions, particularly Europe and Southeast Asia. Price advantages and the technologically improved competitiveness of Chinese industry came to bear, with production volumes once again growing strongly. Investment activity declined, on the other hand, as China had built up overcapacity in many areas. In addition, the ongoing real estate crisis and the high debt levels of many local governments weighed on economic development. The dynamic economies of Southeast Asia, primarily ASEAN-5 (+4.2%) and Vietnam (+7.2%), continued to benefit from lower interest rates and the global surge in AI technology. India’s economy also once again recorded strong economic growth (+7.3%) thanks to monetary and fiscal policy stimuli and high levels of investment in infrastructure.

The US economy grew at a slower rate of 2.1% in 2025 than in the previous year due to the distortions caused by the new tariff regime. Stimulus came primarily from the domestic economy that was driven by vigorous private consumption and robust investment in equipment. Investment activity was also driven by the AI boom. In addition, the restrictive trade policy prompted companies to invest in the USA. The impact of the tariff increases on the inflation rate initially remained limited. In light of the slowdown in economic momentum over the course of the year and the deterioration in the labor market, the US Federal Reserve lowered its key interest rates three times from autumn onward. Although industrial production weakened during the year, it was still slightly above the previous year’s level at +1.3% on average in 2025. Average capacity utilization remained stable at 76.1% in 2025. Other major industrialized countries such as Japan (+1.1%), South Korea (+1.0%) and Canada (+1.6%) grew only moderately in 2025.

Europe’s economy in 2025: moderate growth thanks to robust domestic demand

In 2025, Europe’s exports suffered from the subdued global economy and, in trade with the USA, from the tariff conflict and the appreciation of the euro. The increased competitiveness of Chinese industry also made itself felt – including on the European internal market. In the fall, a tariff agreement was concluded that provided for tariffs of 15% for the majority of EU exports to the USA. Punitive tariffs of 50% were imposed on deliveries of steel, aluminum and copper to the USA. In the eurozone, the industrial economy showed a mixed picture. While the production of consumer goods increased, the momentum for intermediate and capital goods remained weak until late fall. Industrial capacity utilization recovered slightly from its low point and stood at 78.2% in the final quarter (end of 2024: 77.2%). Inflation cooled further, prompting central banks in the eurozone, the UK and Switzerland to ease their monetary policy once again in 2025. This supported domestic demand; fixed asset investments in particular gained momentum. According to the Eurostat statistics office, gross domestic product (GDP) in the eurozone grew by 1.5% in 2025 and thus remained very modest. The expansion in Ireland, Spain, Denmark and parts of Eastern Europe was above average. Sweden, Portugal and the Netherlands grew slightly faster than the eurozone, while growth in France, Italy and Austria was weak. Outside the monetary union, Switzerland lost momentum, while the UK grew robustly.

Germany’s economy in 2025: still undergoing structural change and close to stagnation

According to the ifo Institute, Germany is undergoing a profound structural change that is characterized by decarbonization, digitalization, demographic changes and geopolitical upheavals. Location-related disadvantages and the loss of international competitiveness of important key industries are increasingly weighing on economic development. The challenges were particularly pronounced in 2025. Two of the most important export markets, the USA and China, came under pressure, while the flow of goods to Europe increased in parallel. Industrial production remained correspondingly weak in 2025. Despite this, capacity utilization improved at a low level. In the final quarter, it stood at 77.7%, up from 76.1% a year earlier. The construction industry remained under pressure, particularly in residential construction. However, impetus came from construction services. On the demand side, economic development in 2025 was primarily driven by private consumption and increased government spending. The increase in social benefits in kind had a particularly supportive effect. Despite the improvedinterest rate environment and a generally high need for investment, demand for future-oriented investments in equipment, facilities and buildings continued to decline. According to initial figures from the Federal Statistical Office (Destatis), the German economy grew by just 0.2% in 2025. Although this means that the two-year recession has been overcome, the German economy has not returned to a path of structural growth – apart from catch-up effects – since the economic slump during the coronavirus pandemic.

Exchange rate fluctuations

Due to its international activities, exchange rate fluctuations have an impact on NORMA Group’s business. RISK AND OPPORTUNITY REPORT

In fiscal year 2025, NORMA Group generated around 26% of its revenue in U.S. dollars. The movement of the U.S. dollar against the euro had a negative impact on sales in fiscal year 2025. In addition, there were further negative effects resulting from, among other factors, the Chinese renminbi yuan and the Indian rupee.

Industry-specific influencing factors

The industry-specific influencing factors presented below take into account a large part of the industry segments and regional sales markets served by NORMA Group.

Mechanical engineering 2025: China booming, but Germany still in a downturn

Despite the ongoing uncertainties caused by geopolitical risks and low growth momentum in the advanced economies, the industrial economy improved slightly in 2025 after two weak years. Global industrial production (excluding construction) rose by 3.0% in the first eleven months. Production in the industrialized countries returned to modest growth, while China continued its strong expansion. However, the global mechanical engineering sector did not see a significant economic upturn in 2025. With overall investment declining, only the automotive sector and mechanical engineering recorded growth. In the US, investment activity was driven by the AI boom, among other things. Strategic location-related reasons for adapting to the restrictive trading environment are also likely to have played a role. Overall, according to the German Mechanical Engineering Industry Association (VDMA), global machinery sales grew by 1% in real terms and therefore remained modest (2024: -2%). In addition to China, India (+7%), Brazil (+4%) and Taiwan (+4%) in particular recorded an upturn. In contrast, the US market stagnated. In neighboring countries Mexico (-1%) and Canada (-2%), as well as Japan (-1%), South Korea (-2%) and Turkey (-6%), sales of machinery and equipment fell.

Demand in 2025 for machinery also remained weak in Europe with a few exceptions, although the EU recovery fund made funds available for investments. According to VDMA data, machine sales in the eurozone shrank again in real terms (-3%). The downturn also continued in Switzerland (-5%), while the UK’s mechanical engineering sector recovered from the weak previous year with real sales growth of 3%. Within the EU, the picture was mixed: sales growth was generated in the Netherlands (+4%), Belgium (+1%), Poland, Bulgaria and the Czech Republic. In contrast, sales fell in France (-4%), Italy (-1%) and Spain (-1%). The heavily export-dependent German mechanical engineering sector remained in a downturn in 2025. According to preliminary estimates by the VDMA, production shrank significantly again in 2025 by 5% in real terms (2024: -6.9% in real terms).

Global automotive market 2025: recovering despite tariff turbulence, e-vehicles and boom for Chinese manufacturers

The global automotive market has continued to recover despite the technological upheaval and even more restrictive trade policy as a result of US tariffs. Electric vehicles continued to gain ground. According to data from S&P Global Mobility (S&P GM), 21.0 million NEVs (new energy vehicles) rolled off the production line worldwide in 2025. This corresponds to an increase in absolute NEV production of 23.5%. The combined global market share of battery electric vehicles (BEV) and plug-in hybrids (PHEV) reached a new high of 22.7% in 2025 (2024: 18.8%). Chinese NEV manufacturers dominated the market segment by a wide margin. They produced a good two thirds of all BEVs (2025: 69%) and almost three quarters of all PHEVs (2025: 73%). The entire global market also grew robustly, including light vehicles (LV) with combustion engines. According to S&P GM, sales in 2025 accelerated slightly by 3.4% to 91.7 million LVs (2024: +2.3%). Growth was driven by strong growth in Asia and a moderate increase in North America. In light of these developments, global vehicle production also picked up again. With a total output of 92.9 million LVs, 3.7% more vehicles were produced worldwide than in the previous year. Developments at the established locations were mixed. While Europe (-1.2%) and North America (-1.0%) had to reduce their production, manufacturers in Japan and South Korea generated slight growth (+0.7%). However, China (+10.4%) and India (+7.2%) recorded strong growth. The growth trend for light vehicles also continued in Brazil (+3.3%). The market for commercial vehicles (commercial vehicles, trucks and buses) declined in 2025 due to the economic situation. Global production fell by 0.8% to 3.4 million commercial vehicles.

Europe’s automotive market faced a variety of challenges in 2025. These included US tariff policy, existing uncertainties surrounding the phase-out of combustion engines and the promotion of electric vehicles, new supply risks for microchips (Nexperia) and, last but not least, competitive pressure from Chinese manufacturers. Nevertheless, demand recovered slightly. According to GlobalData (GD), almost 11.8 million cars were sold in Western Europe alone (+1.7%). The European Automobile Manufacturers’ Association (ACEA) puts total European sales (EU + EFTA + UK) at 13.3 million cars in 2025 (+2.4%). Among the major individual markets, Spain stood out with significant growth (+12.9%). In the UK, sales grew robustly. In contrast, France (-5.0%) and Italy (-2.1%) recorded declines. Germany’s market growth was low at +1.4%. Sales of vehicles with combustion engines only shrank significantly in 2025 (petrol: -18.9%, diesel: -24.0%). Their share of new registrations amounted to only 33.9% (2024: 43.4%). In contrast, sales of BEVs (+29.7%) and hybrids (PHEVs, mild hybrids: +16.4%) increased significantly. Despite the market recovery, manufacturers reduced their production in Western Europe by 1.3% in 2025 according to S&P GM, particularly in the UK (-16%) and Spain (-4%). On the other hand, more vehicles were produced in France (+6%). According to the industry association VDA, domestic production in Germany increased by 2% to 4.15 million cars in 2025.

Construction industry in 2025: residential construction segment still under pressure in many regions

The global construction industry is subject to very different regional drivers: Asia’s construction industry is structurally driven by strong population growth and advancing urbanization. The demand for housing, commercial buildings and infrastructure is correspondingly high. However, temporary factors can overshadow this trend. In Indonesia, for example, momentum in the construction sector slowed in 2025 due to an oversupply of office and hotel properties. In contrast, construction activity remained lively in the Philippines and Vietnam, among others. In China, the ongoing real estate crisis continued to weigh on the construction sector. Despite lower interest rates, building construction fell by 17.2% in nominal terms. In addition to weak residential construction, construction activity for commercial buildings also continued to fall. However, investments in industrial production facilities and infrastructure were expanded in some cases, contrary to the general trend.

The US construction industry stagnated in 2025. According to data from FMI, a construction research institute specializing in North America, construction spending fell by 1% in nominal terms (2024: +6%). Residential construction was particularly weak. The construction of new single-family homes fell by 5% and the construction of multi-family homes shrank significantly by 9%. This broad-based downturn in new residential construction could hardly be offset by slightly higher investment in conversions/extensions and replacement buildings (excluding repairs and modernization). Other building construction showed mixed development. On the one hand, construction spending on production and commercial buildings was significantly reduced. According to FMI, this was due to tariff uncertainties, a lower number of major projects, an oversupply of warehouse space and record store closures. The construction of office properties was also burdened by high existing vacancy rates. In contrast, the AI boom led to significantly higher construction investment in the data center sector (+35%). According to FMI, Canada’s construction sector remained on the upswing in 2025 with a 6% increase in nominal construction spending.

Europe’s construction sector stabilized in 2025 thanks to low interest rates and overcame the industry recession. However, high construction costs, subdued private investment activity and ongoing uncertainties prevented a stronger recovery. According to preliminary estimates by the Euroconstruct industry network (including the ifo Institute), real construction output in the 19 European core markets only achieved growth of 0.3% in 2025. Residential construction had a dampening effect, while other building construction increased slightly. The strongest impetus came from civil engineering. At country level, development was mixed in 2025: Ireland stood out with growth of 8.5%, driven by high public investment. Spain, Portugal, Scandinavia and Eastern Europe were also on a robust expansion course. Construction activity also picked up in the UK, Switzerland and the Netherlands. In contrast, construction output in Belgium and Austria declined slightly, while Italy and Spain actually saw a significant drop in volume.

The construction industry in Germany also remained in recession in 2025. Real construction investment fell by 0.9% (2024: -3.4%). Investment by companies was subdued overall, and residential construction in particular was under pressure for the fourth consecutive year. The German Council of Economic Experts sees the high cost of new buildings as one of the main reasons for this. After a longer phase of price corrections for existing properties, their attractiveness increased in comparison to new builds. As a result of the improved financing environment and higher net lending, the increased demand was therefore concentrated on this segment in particular. As a result, many residential construction companies continued to suffer from a lack of orders, project postponements and a high cancellation rate at the end of 2025 (ifo Institute). Despite very high demand, new residential construction is therefore expected to fall to just 235,000 residential units in 2025 (2024: 251,900 units).