HVP Column May 17 – Heatrae Sadia

Mixed Q1 for hot water but prospects positive

An additional trading day this January on January 2016 contributed to 7.2% year on year sales value growth, according to the latest Builders Merchant Building Index. Adjusted for trading days, growth was 2.1%.

Although a little cooler, January was much drier compared to 2016 benefitting external projects and contributing to stronger growth in Landscaping (+8.8%), Tools (+8.7%), Timber & Joinery Products (+8.2%), Plumbing Heating & Electrical (+7.9%) and Heavy Building Materials (+7.7%).  Kitchens & Bathrooms grew more slowly (+6.7%).

Month on previous month

Total sales value in January was 22.8% up on December 2016 but down 0.6% when adjusted for trading days (17 in December 2016, 21 in January 2017). Plumbing Heating & Electrical (+22.2%) performed in line with the total market.

Index

January’s Builders Merchant Building Index was 94.7. Plumbing Heating & Electrical had the highest index (114.9) reflecting its seasonality. Kitchens & Bathrooms (98.1) also exceeded merchants generally.

Paul Rivett, Managing Director Heatrae Sadia, BMBI’s Expert for Water Heating says:  “Quarter 1 sales in the hot water sector were mixed. Domestic unvented cylinders slipped 10% on the same period last year, hit by slow private housing starts and growth of combi boilers in small to medium size houses.

“More combis benefits developers in the short term, but exposes them to customer complaints in winter. Combis struggle to provide enough hot water in colder mains water conditions, particularly if there’s more than one wet room.

“Electric storage water heaters are in line with last year. New commercial products, updated for ErP compliance with new features such as BMS connectivity, pasteurisation cycle to prevent Legionella and smart heating controls are doing well.

“Drinking water, particularly hot tap dispensers are growing. Electric boilers continue to grow despite lower oil prices in off-gas areas, as gas boilers in flats and apartments are replaced to comply with gas boiler and flue regulations.

“The next quarter looks positive, but uncertain BREXIT negotiations could sap confidence.”

BMBI Experts speak exclusively for their markets, explaining trends, issues and opportunities.

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