Welcome to the latest edition of Moorgate Management’s Merchant Matters. In this month’s newsletter we will be exploring the latest news and topical stories from around the building materials industry to help bring you the information you need to grow, adapt or turnaround your business and plan for the future.
Monthly Market Review
The return to growth seen in July 24’s S&P Global PMI index, after a significant fall in June 24, and above May 24’s levels, heralded a positive sign for overall demand within the sector, with activities and new orders across housing projects, civil engineering and commercial sector. Click here to read more
The Construction Products Association “Summer Construction Industry Forecast” provides a more guarded view, predicting total construction output will fall by 2.9% in 2024, with a recovery of 2.0% in 2025, slightly worse than was predicted three months ago. Within this total, RMI is forecast to fall by 6.0% this year, but show a similar 2.0% growth in 2025, signalling the start of the sector’s recovery, and the need to “survive to 2025”. To learn more click here
From a customer perspective, as highlighted in Roofing Today Magazine, there is an increased level of insolvencies being seen in the sector, with nearly one in five (17.3% of the total) being seen – the most recent example being BLENHEIM HOUSE CONSTRUCTION LTD with its knock-on effect to subcontractors, highlighting the need for both merchant and suppliers to understand their customers’ trading. To read more click here
The Merchant View
The Builders Merchant Building Index (BMBI) reports for May 24 show –(9.7%) like-for-like sales performance in the month, compared to –(7.2%) down for Q1 2024. Category wise, renewables and timber and joinery continue to underperform on a like-for-like basis. Click here to read more
The Plumbing & Heating Merchant Index (PHMI) reports for May 24 painted a similar view, with like-for-like sales at –(6.6%), showing a decline from the –(3.6%) seen for Q1-24. Click here to read more
Trend wise for the year 2024 to date, there was positive news from Timber Development UK which showed that although May 24’s timber import volumes were –(7%) down on May 2023, it has been the best month so far this year. Year on year for the five months to the end of May 24, volumes are approximately –(4%) down. To read more click here
The recent trading update from Grafton Group plc for the six months to June 24 reflected these headwinds, showing average daily like-for-like revenue across the group down (4.5%), with UK distribution being –(7.7%) down in the same period, offset by their Irish and Dutch business performances. A similar trading update was posted by Travis Perkins plc for the same period, showing revenue –(4.4%) lower than prior year. To read more click here and Here
Difficulties being experienced by customers are also being felt by merchants, with Builders Merchants Journal highlighting the recent administration of Hitchcock & King, with CTD Tiles filing its intention to appoint administrators a few days later. Click here to read more
Merchants: Acquisitions and Organic Growth
Here is a really interesting Building Products and Services sector insight report published from BDO UK LLP, highlighting the slowdown in acquisition activity in the sector, highlighting in particular how valuations have fallen from post-COVID highs. To read the report click here
Interesting organic growth is being seen within the partnership space, with Jewson Partnership Solutions (JPS) opening five new branches in one month to support social landlords including Saxon Weald and settle Group. Click here to read more
New branch openings by Grant & Stone in Swindon are helping to build out their trade counter network and connect their customers to their sister company Buildit. To read more click here
Suppliers: Acquisitions and Organic Growth
With a continued theme of vertical integration, Aggregate Industries UK‘s acquisition of LAND RECOVERY LIMITED builds out their offering within the construction and demolition materials market. For more details click here
There has been an important development by The Pallet LOOP with the launch of its reusable green, RFID tagged pallets, starting with British Gypsum and 30,000 pallets to its bagged plaster plants. The circulatory offered by this innovation will support both merchants with up to £4 back for every merchant and the industry, helping C02nstruct zero ambitions and Scopes 1-3. Click here to read more
As part of its trading update Marshalls plc has highlighted the increased adoption of concrete bricks, along with their own investment in carbon-sequestered bricks will help improve their profitability going forward. For more information click here
Merchant Buying Groups
With the current challenging market conditions, there are significant benefits for merchants to gain from joining a buying group. In this concise article by Enablethese benefits are set out clearly and, if you are an independent merchant not already in a buying group, it is well worth considering. Click here to read more
Industry Trade Associations
The launch by Builders Merchants Federation Ltd of its Sector Awareness campaign in May 2024, brings with it the launch of the Building Materials Careers website on 19 August 2024, designed to help retain and attract talent into the industry. To read more click here
Merchant Insights
Grow your revenues: With our experience running independent merchants through difficult market conditions such as those currently, we have shared in this article offering our insight on how to grow your existing customer revenues – arguably the easiest customers to sell to. Click here to read more
An invaluable benchmark survey for merchants, published in Builders Merchants Journal and undertaken by SRS Recruitment Solutions, provides detailed breakdowns of salaries across all roles, along with benefits analysis to help with both retention and attraction of talent. For more details of the survey click here
Our industry’s approach to achieve Net Zero created by the Construction Leadership Council (of which the Builders Merchants Federation Ltd ) is a member and called “C02nstructZero”, creates some real opportunities for merchants and suppliers, as contained in this helpful article. For any merchants and suppliers who are not part of the Builders Merchants Federation LtdSustainability group, the work it is undertaking helps you, as members, realise these valuable opportunities. Click here to read more
Merchant Case Studies
We were contacted by a merchant owner who was experiencing significant issues with their stockholding, ranging from stock shrinkage through to goods receipting of suppliers deliveries. Click here to learn how we were able to help
We were contacted by a merchant who was considering the options available to them to grow their business, so were looking to create and implement a three year plan. Click here to learn more
If you’d like to learn more about how we can help you to grow, adapt or turnaround your business, get in touch with Moorgate Management Limited today for informal, confidential and no obligation meeting, or call 07767 291 379.
Thank you for reading.