RCI Column – Negative growth in Q4 rounds off disappointing year for builders’ merchants

Total Builders’ Merchant value sales to roofers, builders and contractors in Q4 2019 were -4.0% down compared with the same quarter in 2018. Adjusted for trading days, average sales a day dropped -2.4%.

Tools (-8.5%) and Timber & Joinery (-6.7%) were particularly affected, closely followed by Heavy Building Materials (-4.6%). The best performing sectors year-on-year were Renewables & Water Saving (+6.4%) and Workwear & Safetywear (+5.8%).

Quarter-on-quarter, total value sales dropped -13.9% in Q4 2019 compared with Q3 2019. The drop was less marked when adjusted for trading days (-5.2%).

Most product categories reported lower value sales over the period, with sales of the seasonal category landscaping down the most, by -33.2%, followed by Heavy Building Materials (-14.8%) and Timber & Joinery Products (-13.1%).

The only two categories to report quarter-on-quarter growth were Workwear & Safetywear (+11.2%) and Plumbing, Heating & Electrical (+3.8%).

The total BMBI index for Q4 2019 was 106.4, a significant drop from 123.6 in Q3 2019. The index for Heavy Building Materials was 105.0.

Keystone Group Director John Duffin and BMBI’s Expert for Roof Windows, comments: “The performance of the roof window market in quarter four continued on the downwards trajectory set in the latter months of quarter three. This meant the double-digit growth experienced at the end of June was eroded still further, with 2019 managing only single-figure year-on-year growth.

“Compared to repair maintenance and improvement (RMI), house building is a small contributor to the overall roof window market, but it was surprisingly strong for Keylite. This may not reflect the NHBC “start” figures, but it aligns better with many of the national house builders’ reported growth stats for the full year. Traditionally this happens as plots are ‘finished out’ and made watertight before the full onset of winter.

“However, the main barometer for roof windows is over-the-counter (OTC) builders’ merchants’ sales to the RMI market. Quarter four saw OTC sales flatten compared to the same quarter in 2018. This resulted in the previously high single-figure growth reported in quarter three dropping away in the final quarter. The dip, driven by weaker consumer confidence in the run up to the December 12th election, looks like it may be reversing. That may reflect the fact that we now have a stable majority government and at least some certainty regarding our direction of travel. As we head out through the EU exit door and start to negotiate our future trade deals ahead of 31st Dec 2020, consumer and business confidence are – in mid-February as this is written – bouncing back.

“As I’ve commented in previously, Keylite is holding high levels of raw materials and finished goods so we can maintain our readiness to deal with any outcome of the upcoming Brexit negotiations. We will build further on our specification sales in 2020 and, along with an exciting new product launch planned for April, we have every opportunity to fuel our growth ahead of the market.”

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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