AWMS Comment: Q1 2019

John Coe, Commercial Director Alumasc Water Management Solutions (AWMS) is BMBI’s Expert for Civils, Metal Rainwater & Drainage.

From our vantage point, the first quarter had a good start to the year across all sectors.

The market, civils in particular, was reasonably busy last quarter. As we noted in last quarter’s report, the industry anticipates several major civil projects starting in 2019 including work on docks and regional airports such as Stanstead, Manchester and East Midlands.

Now that the Brexit saga is potentially rolling on until October, businesses in construction can at least move forward with a little more stability. There is far less talk about Brexit in the industry, despite all the sound and fury emanating from Westminster and the media. Companies are just getting on with the business of building. However, the uncertainty is manifest as a general reluctance to commit to investment in larger projects and schemes.

While the Builders Merchant Building Index (BMBI) figures are sales out from merchants to the market, other figures don’t necessarily translate directly into market activity. We believe some Q1 activity may be overstated because a good number of suppliers (AWMS included) have been building additional stock in anticipation of the Brexit deadline. There is also a significant cost to carrying surplus stock for a prolonged period and this will be affected negatively by continuing delays in large projects. This cost of uncertainty could become an industry hangover later in the year.

On the plus side, the Grafton Group and Travis Perkins posted very positive first quarter results. Both these nationals contribute to the BMBI data and the good level of ‘like for like’ sales is a good barometer of industry activity.

As a good indication of civils, metal rainwater and drainage sales, AWMS’ April sales came in at forecasted levels. May started slower and has not recovered with order intake levels less than forecasted levels.

Looking ahead, although enquiry levels are strong, project starts are continuing to be affected by uncertainty, lack of confidence, and delays.

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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.