AWMS comment: Q1 2018

Steve Durdant-Hollamby, Managing Director Alumasc Water Management Solutions (AWMS) is BMBI’s Expert for Civils, Metal Rainwater & Drainage.

I expect our experience of the first quarter of 2018 is similar to other heavy side manufacturers. Following a positive start, adverse weather conditions in March and April led to a significant slowdown in sales and delays in project completions. We now have a six week lag in the supply chain that is unlikely to be recovered.

While housebuilding is holding up reasonably well, the uncertainty and slowdown in commercial new build and RMI is more significant. The civils market never really got going this year, even though infrastructure growth remains positive. The fallout from Carillion has made the whole contractor supply chain cautious, resulting in a great deal of rebids for new work. This is adding further delays in the project pipeline.

The short-term outlook for metal rainwater remains positive. However, this market is influenced by housebuilding activity. Rainwater is one of the final products to be installed on-site, so this sector may not have seen the full effects of any project delays in construction. The greater area of concern is that delays in commercial and large infrastructure projects will push back rainwater installations and reduce sales later in the year.

Credit limits are being pulled on some installers, adding to the problem. In addition, market and economic uncertainty means that larger contractors in particular are less inclined to invest in people or new technology that would help speed up project completions. Therefore, we don’t feel that business lost in Q1 will be recovered in 2018.

The prolonged uncertainty of Brexit and constant infighting in government is extremely disruptive. The threat of tariffs by US President Trump, and the consequent political disputes, has caused a significant rise in the price of aluminium. This has a knock-on effect on the cost of aluminium rainwater and causes further uncertainty.

Overall, it’s been a tough start to the year. However, products and systems sold via merchants continue to perform well and demand in housebuilding remains. We do believe that the next quarter’s performance will be more positive.

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