Hanson Cement comment: Q4 2016

Andrew Simpson, National Commercial Director Hanson Cement is BMBI’s Expert for Cement & Aggregates.

Demand for mineral products was strong in the final quarter of last year, helping to boost overall 2016 sales volumes by 4% for ready-mixed concrete, 4.2% for aggregates, and 4.6% for mortar. Sales to builders’ merchants were up in Q4 on a like-for-like basis. Asphalt was flat as progress on some major road schemes was delayed but we expect to see the momentum for all products flow into 2017. Demand for ready-to-use products remains high, and like-for-like sales are better than other product lines. As anticipated, demand for plastic packaged cement increased in the winter months.

Despite the uncertainty around Brexit, we have not seen it impact significantly on construction activity, and the outlook is positive.

The Government’s commitment to accelerate housebuilding will be welcomed by the builders’ merchant sector. The Mineral Products Association forecasts that infrastructure spending will rise to £66.1bn in 2017/18, and merchants will benefit from this increased activity too.  It’s important therefore that suppliers and builders’ merchants are ready to meet this increase in demand.

Restoring some of the capacity that was taken out of the market during the recession and improving plant efficiencies gives customers security of supply in a growth market. Investing in people, processes and merchant staff training puts customers first and ensures they sell the right product for the job so they and their customers can make the most of the growth opportunities.

Adding value to the customer experience is crucial to maximising sales all along the supply chain. Recent research we conducted among end-users indicates that there is still a substantial knowledge gap among small contractors and the DIY market when it comes to picking the right product for the job. This is where merchants and their staff can really add value and stand out from online suppliers.

There is a lot to be positive about at present, a view shared by some investment analysts, who believe that construction stocks could be undervalued given recent performance announcements and on-going work streams. The crux will be whether that confidence can be sustained and transformed into activity on the ground.

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