Outlook positive despite the uncertainty

The latest Builders Merchant Building Index (BMBI) shows builders’ merchants’ sales to builders and contractors up 11.4% in March 2017 compared with March 2016. A late Easter meant two more trading days in March 2017, generating slightly artificial total sales growth. 

On a comparable basis, sales per trading day were up 1.7%. All categories sold more in absolute terms, with some achieving their highest year on year increase in the last 12 months, including Timber & Joinery Products (+13.0%). 

March sales were up 22.2% compared with February, gaining from three more sales days, but still up +6.3% sales per trading day.

Quarter 1

March’s strong performance coupled with a warmer, drier period were key to 5.9% sales growth on Q1 2016 (+2.6% per trading-day). Tools (+8.8%) and Ironmongery (+7.2%) were the fastest growing categories this quarter, while the ability to start external works in a warmer, drier winter lifted Timber & Joinery 6.7%.

Index

March’s BMBI was 122.8 (110.8 adjusted), up from 100.5 in February.

BMBI March 2017: Monthly sales chart adjusted for trading days

Malcolm Gough, Group Sales & Marketing Director Natural Paving Products and BMBI’s Expert for Natural Stone Landscaping Products comments: “The Brexit vote has had a big effect on the natural stone hard landscaping market. The pound is buying fewer Indian Rupees; shipping costs have increased nearly fivefold, up from £400 to £1,800 a container. Combined with increases in raw material costs this is hurting suppliers, particularly smaller players. Costs of particular natural stone products such as grey and pale cream are also more volatile because of their origination.

“Higher costs are being passed on – we estimate prices are 25% up on average across the market – but the level of these increases means not all of it can be passed on. This is savaging supplier margins.

“Despite Brexit upheaval, we estimate market volume is up by 3-4%. Higher prices mean values are up more too. Price rises are also closing the gap between natural stone and other premium hard landscaping products such as Italian porcelain vitrified paving. This is opening up new opportunities to cross sell and up sell.

“These are challenging times for these markets, but there are also many opportunities. With summer around the corner, we’re expecting a positive Quarter 2.”

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