RCI Column – Builders’ Merchants’ Q1 sales hit by Coronavirus restrictions

 

Builders’ Merchants’ sales to roofers, builders and contractors in the first quarter of 2020 were knocked by the COVID-19 pandemic and Government measures to contain the virus.

Year-on-year

Total value sales in Q1 2020 (unadjusted for trading days) fell -6.7% compared with the same period in 2019, with all core product categories affected. Adjusted for trading days, Total Builders’ Merchants’ value sales dropped -8.2%.

Tools (-12.7%) and Timber & Joinery Products (-11.1%) reported the biggest falls on an unadjusted basis. Plumbing, Heating & Electrical (-7.4%), Heavy Building Materials (-6.5%), Decorating (-5.1%) and Kitchens & Bathrooms (-4.1%) were also down. Perhaps not surprisingly, the one outstanding performance was in Workwear and Safetywear up +24.2%.

Quarter-on-quarter

Total value sales dropped marginally by -0.8% in Q1 2020 compared with Q4 2019. Most product categories reported lower value sales over the period.

Index

The quarterly BMBI index for Total Builders Merchants was 105.6, with Workwear & Safetywear ahead of all categories at 129.1. The Index for Heavy Building Materials was 104.8.

Neil Hargreaves, Managing Director of Knauf Insulation and BMBI’s Expert for Mineral Wool Insulation, comments: “It is astonishing how much the landscape has changed since January. In an unprecedented way, COVID-19 has affected UK industries and the construction sector has clearly not been spared. At the time of writing this, the sector is steadily reopening.

“Although the economy is restarting there is some uncertainty on how long it will take to recover. It is estimated that new house builds will decrease by around 40% this year whilst the overall UK construction will fall by over 20%. Housebuilders and other construction firms are unlikely to build at the same “pre-virus” rates, with concerns over demand, funding, and supply side challenges such as managing on-site social distancing all having an effect.

“Government needs to think carefully about the economic stimuli they will use to relaunch the economy. Lots of people will be reassessing their view of the world and what’s important to us. Certain infrastructure projects might not be as relevant as before, as we shift to more homeworking with less travel for work or leisure. The need to build more, better quality houses remains. Furthermore, the drivers to move away from combustible materials in higher rise buildings and to reduce carbon emissions from the building stock have not gone away. It is reassuring to see that the £9bn promised by the government for retrofit energy efficiency measures over the next decade is still planned. The question is now more about how this will all be funded and which areas will be prioritised.

“All of these factors make it extremely difficult for builders’ merchants and the rest of the supply chain to predict the demand for construction products in the short to medium term. It is therefore more important than ever before that we work together to share thoughts and keep supply flowing, whilst ensuring safe distancing is put in place to keep our people safe and avoid a second peak for the virus.”

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

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Launched in 2015, the award winning monthly Builders Merchant Building Index (BMBI) report is the only reliable measure of repair, maintenance & improvement (RMI) activity in the UK. Filling an important gap, it can be widely used in construction, and by economists, Government, national media, commentators and influencers outside the industry.

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