Welcome to the March 2025 edition of Moorgate Management’s Merchant Matters, where we look at current trends, news and related stories from around the builders’ merchant and building materials supply industry to help bring you and your business the information you need to develop your business and navigate the challenges that lie ahead.
Monthly Market Review
The latest monthly macro environment continues to reflect the trends seen within Q4-24 as witnessed by the recently published Federation of Master Builders Q4-24 State of Trade survey, which signals a rise in material costs and drop off in both workloads and enquiries. Click here to learn more.
Flash PMI numbers for Feb-25 from S&P Global show a continual stalling of business activity, with job losses mounting amid falling sales and rising costs which, with a lack of growth, raises a danger of a “stagflationary environment”. Order books were seen to have dropped at a rate not seen since Aug-23, with costs rising similarly at a rate not seen since May-23, and before the impact of any national minimum wage and employers NI increases taking effect. As anticipated, this impending cost increase has seen employment levels in the month fall sharply at a rate not seen since the global financial crisis. To read more click here.
The downturn of new orders and awards in Feb-25 is well illustrated within the latest Barbour ABI snapshot, showing new orders falling 10% from Jan-25 levels to £7.6bn, with residential falling by 45% to £1.4bn and planning approvals falling by 41% to £2.32bn. On a positive note, infrastructure provides some evidence of green shoots with a large growth in awards to £1.3bn, with the North West benefitting from new hydrogen plan and M60 road projects. Click here to learn more.
Looking forward, however, there are some significant framework initiatives announced that will stimulate demand. The South East Consortium published its Decarbonisation and Fire Safety frameworks worth a combined £1.4bn, together with a £300m top up to the Affordable Homes Programme (AHP) announced by Ministry of Housing, Communities and Local Government to fund a further 2,800 homes. In addition, Southern Housing Group announced a £1bn housing retrofit and upgrade framework tender too.
Set against this backdrop, customer trading updates showed a mixed picture within each sector:
For contractors, BOUYGUES UK delivered a positive set of full-year results, with sales and operating profits marginally up on the prior year and margins up 0.2% at 4.5%. With similar results, KELLER shows a margin increase in sales of 4% but with operating profits up 22% year on year. To learn more click here. Foundation specialist Van Elle, in contrast, showed marginal declines in both sales and operating profit with its interim results for the 6m to Oct-24.
Housebuilders delivered a mixed set of results, with Morgan Sindall Group plc subsidiary Lovell Partnerships Ltd delivering full year results showing a 3% increase in revenue and a 7% increase in its secured order book on the prior year. Taylor Wimpey plc showed declines in both revenues, operating profits and completions in its full year results. In an interesting move, Springfield Properties sold 2,500 plots to Barratt Redrow, using the proceeds to pay down debt and change focus onto building Green energy homes in Northern Scotland.
Facilities Management continued to demonstrate resilient demand with Mitie announcing revenues up 15%, 11% of which was organic, together with M&A including its acquisition of Argus Fire. To learn more click here.
M&A activity continued, particularly within the contracting, service and Housing Association spaces:
United Living Group strengthened its infrastructure capabilities with its acquisition of Jones homes. Within the Housing Association space, South East landlords Paradigm Housing Group and Settle announced discussions to enter into a legal partnership for their combined 30,000 homes.
MMC provider Thurston Group enhanced its capability with the acquisition of fabrication specialist Storplan and its 1,900 sq-m facility. Click here to learn more. In contrast to Thurston, Berkeley Group Plc announced closure of its Modular activities after looking to exit the sector.
Sadly, insolvencies also continued with both contractors and housebuilders:
Contractors figure heavily, with Southern contractor Acheson Construction filing for administration along with both Midlands-based TNA Electrical, the building services specialist filing for administration and North West Civils contractor Colin Briscoe Construction.
Welsh housebuilder Enzo Homes also entered administration. To read more click here.
The Merchant View
The Builders Merchant Building Index (BMBI) report for Q4-24, including the month of Dec-24, highlighted a relatively flat trend with total value sales in Q4-24 being slightly down (-0.5%) on Q4-23 made up of +2.3% volume and (-2.7%) price movement. In Dec-24 value sales were +3.0% up on Dec-23. Taking a step back, these reflect a more positive end to H2-24 compared to H1-24 and, as highlighted in the report, a positive return to volume growth. Like for like, sales in Q4-24 were -(2.2%). Interestingly, when looking at product category performance, Heavy building materials and Timber and Joinery saw volume growth and overall price declines, with Landscaping seeing the complete opposite. Click here to learn more,
In a similar vein, the Plumbing & Heating Merchant Index (PHMI) report for Q4-24 showed a relatively flat trend, with total sales value for Q4-24 being practically flat at (-0.2%), and with volume up +5.1% but with prices (-5.1%) lower. The month of Dec-24 struggled too, with sales (-2.2%) down on Dec-23, with increased volumes +6.5% being offset by an (-8.2%) drop in price. More worryingly, when adjusted for trading days, Dec-24 like for like performance was (-8.0%) down. To read more click here. Despite this drop, there was another positive step up in renewables demand, with more than 27,000 MCS accredited installations in Feb-25, taking the 2m YTD to over 50,000, with both solar and battery storage showing strong growth. Click here to learn more.
When focused on timber, import trends continued to improve at the end of Q4-24, with import volumes +13.5% higher for Q4-24 when compared to Q4-23, reducing the like-for-like shortfall for the whole 2024 year and ending marginally up on 2023, at +0.5%. To learn more click here. In a positive sign to increase the use of timber in construction, the work undertaken by Timber Development UK has resulted in the Timber in Construction Roadmap (TIC) being adopted by Government, with recent enhancements to the roadmap focusing on reuse and species diversification. Click here to learn more.
With these market conditions being faced by merchants, recent trading updates provided have continued to show very mixed results:
The results for the year to Jan-25 from Kingfisher plc showed an overall (-1.7%) like-for-like decline in sales and a (-29.7%) reduction in operating profit for the period. Within the UK, B&Q delivered a (-0.4%) decline in like-for-like sales, with Screwfix delivering a +1.0% like-for-like growth. Interestingly for Q4-24, TradePoint UK reported +6.7% like-for-like growth. To learn more click here.
Travis Perkins plc contended with issues surrounding both delayed publishing of its annual results as well as announcing its CEO was stepping down due to ill health.
In a really interesting contrast to performance in the US, Ferguson published its second quarter results, showing a +3% growth in sales, driven by +5% sales volume growth offset by -2%) price inflation but, with gross margins 40 basis points lower, operating profit reported was (-10.7%) lower than prior years’ second quarter. Click here to read more.
With the KBB space, trading conditions also continue to be challenging, with Magnet Kitchens owner Nobia Holdings continuing to make losses since 2019, with its continued restructuring but interestingly looking to expand its offering within the premium market to help it return to profitability. To learn more click here.
Uncertainty and insolvencies within merchants unfortunately continue to be seen:
Set against a backdrop produced by Insight Data showing a (-32%) reduction in builders merchants insolvencies in Feb-25, Blanchards Building Supplies went into administration with administrators looking for a buyer for the five-branch business.
Separately, Interpath is working with Independent Builders Merchant Group to support its future. Click here to learn more.
Although there were no material merchant acquisitions undertaken and new shareholders in Buttles plc, there has been significant investment made in organic growth with new branches:
Looking at new branches, Burton – The Roofing People have invested in a new Bridgend branch adding to their existing 36 branches as well as NBP Ltd, with the opening of its fifth “Super Depot” in Hemel Hempstead, providing 25,000sqft and its first branch in the South of England. Duftons Plumbing & Heating Supplies too have opened two new branches in Durham and Stockton on Tees.
Investments in branch relocations and refurbishments have been made by City Plumbing with the relocation of its Bristol branch, together with Wolseley Plumb Centre‘s refurbishment of its Folkestone branch. As part of its refurbishment of its Norwich branch, Jewson has opened its first Sustainability Centre, with a dedicated Building for the Future Product range to support the Future Homes Standard.
The Suppliers View
The consolidation trend within suppliers to provide broader solutions continues to gather pace:
Sika has broadened its solution offering with the acquisition of Cromar Building Products and provides a complimentary product range, distribution and manufacturing network for Sika. To learn more click here. Eurocell plc has similarly seized the opportunity of expanding its residential aluminium systems and composite door offerings through its acquisition of Alunet. Click here to understand more.
Expanding its presence outside the UK and continuing its vertical integration strategy, Breedon Group plc has acquired the Missouri-based construction materials and surfacing solutions business Lionmark Construction Companies, LLC. Click here to read more.
Recent trading updates from suppliers have continued to offer some longer-term positivity about future demand:
Breedon Group plc‘s annual 2024 results showed that despite a (-5%) like-for-like reduction in revenue, the Group delivered an 11% increase in EBITDA for the year.
In its recent trading update, Brickability Group PLC saw the four months to Jan-25 deliver a growth in revenue of +12.3%, with strong demand being seen by all four of its division including its solar PV business.
Within the KBB space, Villeroy & Boch has benefitted from the acquisition and integration of Ideal Standard International NV, with revenue including acquisitions up 57% and EBITDA up 10%, benefitting from its previous investment of over £58m in manufacturing.
There has been continued investment in manufacturing capacity ahead of market upturn:
Cemex has opened a new Readymix plant in Swindon, increasing capacity along with Etex investing over 200m euros in a new Plasterboard manufacturing plant in Bristol.
In another significant investment, James Donaldson Timber has doubled the production capacity of its Scottish business with a new 110,000sq ft facility in Chorley.
SAM – Home of MDF Mouldings has announced a £20m investment to install new state-of-the-art bespoke machinery to double the size of its current production capacity, which includes the recent West Midlands distribution centre opening.
In a significant sign of confidence in both the Northern Irish and KBB markets, MyLife Bathrooms has also announced a £15m investment in a new 85,000sq ft facility adding to its sites in Southam and Wishaw.
Merchant Buying Groups
Following the administration of EZ-base, a proactive move by NMBS has helped merchants who were previously EZ-base customers to transition their product data needs to NMBS’s OnePlace, ensuring they can continue to support their customers. To read more click here
To further support its members, National Buying Group LLP has updated its member portal (“Hub v3”) to make business-critical data more accessible to its merchant and supplier partners. As part of the update, new “analyse pricing” functionality is available to partners helping them to highlight average price variations on buying group deals, along with enhanced reporting capabilities and interactive turnover management to capture unreported turnover. Click here to read more.
Industry Trade Associations
Momentum has been growing with Code for Construction Product Information (CCPI) accreditations, with BESA Group joining the growing number of trade associations and manufacturers endorsing and implementing CCPI. To learn more click here. The latest example of this being Donaldson Timber Engineering who has now achieved CCPI accreditation for its roof trusses and joists, which provides an advantage when looking at the specification market. Click here to read more.
Looking at supply chain availability, there was a mixed statement issued by the Construction Leadership Council Materials Supply Chain Group, with positive sentiment regarding the level of supply, with few issues reported, however the statement warned that price inflation is likely to be experienced, estimated to be between 2% to 8%. To learn more click here.
In addition to the formal launch of the Building Materials Careers initiative in Feb-25 by the Builders Merchants Federation Ltd, there was welcomed news ahead the Spring Statement with a £600m investment by Government in the industry, to facilitate the training of up to 60,000 new skilled workers, in an attempt to address the current 35,000 vacancies where over half are vacant because of insufficient skills training. For merchants, most of this funding is being channelled into new Technical Excellence Colleges where merchants are already working in partnership with them. Click here to read more.
In a positive move to support merchants within the Republic of Ireland with product data standardisation, ETIM UK and Ireland announced the expansion of its membership and services into Ireland. Together with the BMF’s Product Data Standardisation template, this will significantly increase improvements in the quality and enrichment of suppliers’ product data to help merchants better serve their customers. To learn more, click here.
Merchant Insights
With the current trading conditions and planned increase in national minimum wage and employers’ National Insurance, merchants are facing significant headwinds. Understanding your customers and helping them ensuring that your branches are operating as efficiently as possible to give your colleagues time to speak to customers is key.
Customer segmentation is the key to understanding your customers. To segment them you need to talk to them and understand what they are doing. Understanding how to segment your customers and what to do with that information, and then how to monitor the actions you take, all form a vital part of maintaining both customers and supporting your like-for-like sales performance. We have shared our experiences on customer segmentation as part of our “Merchant Healthcheck” series to help merchants like you. To learn more click here.
Product extensions are an important part of retaining and growing customers, and an interesting step by K Rend with their new custom mixing machine, allowing merchants to offer custom colours to differentiate their offering with MGN Builders Merchants being a great example. To learn more read here.
Product innovation is an equally important part of understanding your customers. One such innovation for brick contracting and housebuilding clients is the Brick Bud system from Harris Brick Safety Systems, which is designed to both provide a better and safer solution for bricklayers to temporary structures on site, by reducing wall blow downs and improving both health and safety on site and site profitability. Click here to read more.
Helping your customers to grow their business not only stimulates demand but also grows loyalty. An interesting example of this is provided by City Plumbing, with its recent partnership with VitoEnergy Ltd to provide an MCS Umbrella Scheme to offer non-MCS accredited installers with a fully supported route to grow their business with access to grants under the Boiler Upgrade Scheme. To read more click here.
Training both your colleagues and your customers on the changes in legislation can provide both loyalty from customers and increased sales from colleagues, as “people sell what they understand”. A really helpful trade counter guide on both the Future Homes Standard and the Building Safety Act can be found by clicking here.
Investing in apprenticeships is often seen as significant in terms of both cost and time involved, but with support now available to manage the schemes, and initiatives underway to promote and capture a pipeline of people interested in your business, it is well worth considering. Support is available with the BMF Apprenticeship Support scheme, working in partnership with LEAP Apprenticeships & Early Careers, to help engage, manage and fund the apprenticeship program. In addition, BuildingMaterialsCareers now provides applicants with the opportunity to search for merchants offering schemes and to upload their profile – being a ready resource for merchants to find talent. Click here to read more.
Health and Safety plays a key role in merchant businesses, and not simply to protect your colleagues, customers and suppliers. With several £1m+ incidents occurring, including Travis Perkins and West Fraser, the importance of providing a safe environment is paramount. What is not often understood is that by doing so, you are also creating an efficient business with scalable processes which mean that more of every £ you earn in revenue will fall to the bottom line as profit. A great start is provided by the Builders Merchants Federation Ltd with its Health and Safety Minimum Standards, which set out clear and helpful processes that will help improve the profitability of your business. To read more, click here.
With the changes in waste regulation coming into force for merchants, the need to understand and educate colleagues is paramount. In addition to the services offered by BMF Service providers, the Supply Chain Sustainability School (UK) provides some helpful and easy to understand webinars that colleagues can view as the regulations require a change in culture, and the need to win “hearts and minds”. To view resources available click here.
Merchant Case Studies
With the current market conditions impacting customers’ ability to pay, and merchants’ ability to pay suppliers, managing your cashflow as a merchant has never been more important. Being able to see what your future cashflow is likely to be, and being able to adjust that real time for changes in timing of customer or supplier payments and see the impact is key, because if you then have a funding shortfall, you have time to find a solution.
13 week cashflows provide you with just this ability, and Moorgate have shared our experiences with our clients and outlined the benefits of 13 week cashflows and how to create these. To learn more click here.
If you’d like to learn more about any of the topics covered and how Moorgate Management can help you to grow, adapt or turnaround your business, contact us today or call 07767 291 379.
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