Welcome to the latest monthly edition of Moorgate Management’s Merchant Matters, where we look at the latest news, related stories and trends from across the building materials industry, to bring you the information you need to grow, adapt or turnaround your business and plan for the future.
Monthly Market Review
An interesting macro backdrop published by Office for National Statistics for Apr-25 shows construction output estimated to have grown by 0.9% in the month, being the third consecutive period of growth, following the 0.5% increase in Mar-25. Click here to learn more.
This, however, is tempered by the RICS UK Construction Monitor for Q1-25, which reported neutral (-1%) workloads representing a softening over the last 12 months, with growth driven mainly by government spending on infrastructure and energy projects. Headwinds posed by both credit conditions, insolvencies, regulation and planning continue to exist but of concern is the (-12%) fall in profit margin expectations, worsening for the third consecutive quarter. To read more click here.
The S&P Global flash PMI numbers support this view, with a decline in Apr-25 driven by lack of business confidence. This partially recovered in May-25, although the index remained below the 50.0 neutral level for a second successive month, albeit with less of a decline than in Apr-25. Click here to read more.
Sector wise, NHBC reported that new homes saw a rise in registrations in Q1-25, with over 29,000 new homes registered to be built compared to only 21,000 in Q1-24. This positive uptick was attributed to both more confidence and the increase in properties outside of London, which are less affected by the Building Safety regulators gateway approvals process (for high rise). To read more click here.
In contrast, the NFRC Spring ’25 State of the Roofing Industry report highlighted that activity in the UK roofing sector was slowing, with both workloads and enquiry levels down (-9%) on LfL quarters last year. Click here to read the full report.
Looking ahead, the Glenigan | Powered by Hubexo 2025 Summer Forecast predicts a positive outlook over the next three years, with 3% growth expected in 2025. An emphasis on the private housebuilding sector and infrastructure spending underpins these views. To learn more click here.
Customer trading updates across each sub sector show a broadly resilient sets of results:
Tier 1 Contractor Tilbury Douglas reported both an improved operating margin and a doubling in pre-tax profits in its second year of independent ownership, with growth across each of its four sectors – building, fit out, engineering and infrastructure. Click here to read more.
Design and build contractors McAleer & Rushe reported similarly upbeat results with turnover up over 12% and pre-tax profit up 45% from the prior year, driven by strong performance in each of its residential, student accommodation and leisure sectors. Importantly, it also reported a projected turnover near £500m based upon contracts secured in 2024 and subsequently reflecting positive sentiment. For more detail click here.
Similarly, Murphy Group delivered a 25% increase in pre-tax profits to £84m, attributed to both sharpened contract selection and by delivering operational efficiencies. Click here to see detail of the results.
Looking at Housebuilders, there was a very mixed picture:
Taylor Wimpey plc reported an 11% increase in completions in its half-year results, but an (-11%) fall in group operating profits to £161m after a £20m charge for contractor remediation and an increase in its cladding safety provision of over £220m due to cavity barrier remediation work. Click here to read more. Similarly, Crest Nicholson plc set aside £132m last year for remediation but this year has returned to profit with its results for the latest months showing £9m in pre-tax profits (£31m last year) and revenues broadly flat at £249m. To see the full results click here.
Cala Group Limited, the PE-backed Edinburgh-based housebuilder, saw both pre-tax profits (by 30%) and turnover (by 4%) fall in the year to 31 December as a result of fewer completions, a lower average asking price and a number of sites being delayed due to planning. To learn more click here.
Within the Facilities Services space, NG Bailey reported its highest ever turnover at £662m, with underlying operating profits up 33% and an order book of £1.6bn, up 14% on the prior year with its newly formed Built Environment division (combining engineering and facilities services) driving this success. To learn more click here. To provide context to the results, SFG20 has produced an interesting state of the market report, showing key drivers and some fascinating underlying trends. To access the report click here.
Within the Housing Association space there were really positive moves to stimulate demand, with Peabody securing a £60m loan agreement with Lloyds Banking Group to retrofit thousands of its homes across London and the South East – the loan being partly guaranteed by the National Wealth Fund as part of the £1.3bn social housing guarantee retrofit scheme. Click here to read more.
In a similarly positive move following the completion of its recent merger, Bromford Flagship secured a £75m investment to progress its strategic aims of building a further 2,000 homes in each of the next 30 years to compliment its existing 80,000 home portfolio. To learn more click here.
M&A activity continued in both the contracting and consultancy sectors:
PE-backed environmental services group Adler & Allan acquired South West Civils contractor Glanville Environmental – its ninth acquisition in just four years enhancing the utilities and infrastructure capability. To learn more click here. Infrastructure specialist M Group continued expanding its critical communication offering to customers through its recent acquisition of Telent Technology Services Ltd. For more details click here.
Utilities contractor Avove Utilities has acquired wastewater solutions specialist Jacopa Limited (Ireland) to expand its utility operations in Northern Ireland. Click here to read more.
Professional services business WSP has acquired global consulting firm Ricardo plc, strengthening its global presence and operating in more than 20 countries with a sustainable and rail infrastructure focus. Click here to learn more.
In an interesting move, Mace has separated its contracting and consulting businesses with Goldman Sachs Alternatives taking a majority investment in Mace Consult with the aim of supporting future growth through strategic acquisitions. To read more click here.
The trend in construction insolvencies continued, with the latest BCIS reports highlighting 385 construction insolvencies – an 18.5% increase on previous months. Worringly, of these 190 of them were within the specialised construction activities category. Click here to read the full report.
Several contractors have resized their operations, with Lorne Stewart Group closing its offsite construction subsidiary after a period of prolonged losses and difficult market conditions. To learn more click here. M&E contractor Dalkia is also looking at redundancies based on contracts ending with no new immediate starts. Click here to learn more.
The Merchant View
The Builders Merchant Building Index (BMBI) for May-25 painted a more positive picture, with Like-for-Like (LfL) sales for the month at +5.0%, unchanged from Apr-25 with volume sales (unadjusted) up +2.1% and sales value (unadjusted) (-2.1%). Category wise, seasonality was reflected with timber and joinery products up +1.4%, landscaping up +1.9% and renewables and water (although a smaller category) up +23.4%. Both heavy building materials and plumbing and heating lagged behind the total builders’ merchants average index at (-0.4%) and (-0.3%) respectively. To learn more click here.
Similar positive sentiment is seen with the May-25 Plumbing & Heating Merchant Index (PHMI), with LfL sales for the month at +5.1%, but with sales volume decreased by (-5.9%) and sales value increased by +6.3%. Unlike the BMBI, May-25 were (-2.4%) down on Apr-25. Click here to learn more.
Timber import volumes saw a slight growth in Q1-25, being 0.6% higher than the prior year at 2.26m m3. This reflects an improvement in the market since Jan-25 which was described as “challenging” by Timber Development UK with volumes dropping 1%, with increases of +9% and +13% in Feb and Mar-25. This masked a 2% growth in softwoods and a (-2.8%) decline in hardwoods. OSB, Plywood and EWP all saw growth, with MDF and whitewoods showing declines against higher prior year comparisons. To read more click here.
The growth in renewables sales continued, with MCS reporting over 30,000 installations across the UK in May-25, 5,100 heat pump installations and 21,100 solar PV installations – a marked increase on the previous month. Click here to learn more.
Trading updates recently released show a fairly resilient picture amongst merchants:
Grafton Group plc traded in line with expectation for its six months to Jun-25, showing a mixed picture across its portfolio, with Ireland being the strongest performer (including MacBlair and Chadwicks Group) at +3.7% LfL, the Netherlands (including Isero B.V.) at +2.8%, the UK (including Selco Builders Warehouse) at +0.2%, and Finland (including IKH Group) at (-4.2%) with its latest acquisition in Spain (Salvador Escoda, S.A.) delivering +6.9% LfL. To read more click here.
Similar results were reported by Kingfisher plc for Q1-25, with Screwfix reporting +2.9% LfL growth in the period, and B&Q reporting +7.9% LfL (of which TradePoint UK reported +7.9%). This contrasted to international performance with France (Castorama and BRICO DÉPÔT) reporting (-3.2%) LfL and Poland (with Castorama) at (-3.2%) also. To learn more click here.
In a positive step forward, Huws Gray reported a reduction in operating losses for the year to Dec-24 to (£134m) along with an improvement in gross margin, although a reduction in net assets in the year down to £281m. Click here to read the full report.
Similarly positive results in the HVAC space were published by Smith Brothers Stores Ltd, with turnover up 6.9% on the prior year with new branch openings and operating profits maintained at £13.6m despite pressure on gross margins dropping to 27.9% in the year. To learn more click here.
As a benchmark for the KBB sector for merchants with showrooms and B2C exposure, Wren Kitchens’ recent results showed a (-5%) drop in turnover to £918m, with a resultant (-9%) drop in operating profit to £69m, despite an increase in gross margin to 51%. To read more click here.
From a distribution perspective, SIG plc reported a +1% LfL sales growth in its latest half-year trading update, with the UK reporting +5% (with Interiors contributing +8% and Roofing +5%) with the EU reporting (-1%) with Germany flat and French Interiors and Roofing at (-7%) and (-4%) respectively. Click here to see update.
With a positive downward trend in the number of builders’ merchant insolvencies being reported in Jun-25 by Insight Data to just eight in the month, though regional variations exist with the South West and the Midlands being the hardest hit. To see more click here. With the benefit of a pre-pack process, The CMO Group has been acquired by Lords Group Trading. Click here to read more.
Opportunities for acquisitions were seen with COWAL BUILDING & PLUMBING SUPPLIES LIMITED acquiring Neilson’s Joinery Superstore to support its breadth of offering to its customers. To learn more click here.
Similar strategic initiatives to capture share of customer wallet are seen within both light and heavy side merchants. Within the Plumbing and Heating sector, there is a drive to capture both renewables installers and the 48%+ of plumbing and heating engineers that have trained in electrical – an example of this being City Plumbing and the launch of its Electrostore nationwide within its branches. Click here to read more.
Similarly within the heavy side, IBMG (Independent Builders Merchant Group) has launched its IBMG Supply Chain Services offering to focus on social housing and procurement frameworks, in competition with Huws Gray Supply Chain Solutions, Travis Perkins Managed Services and Jewson Partnership Solutions. To read more click here.
Investment in new branches has accelerated with Travis Perkins in Rickmansworth, the redevelopment by Jewson of its Luton branch, the purchase by Lawson of Romford and Edgware sites and Brewers’ new site in Walhamstow.This has included some interesting new offerings too with Wolseley Group’s nationwide Renewables centre initiative and LBS Builders Merchants’ new showroom in Llandeilo.
There have also been some interesting divestments too, with Travis Perkins plc sale of its Staircraft business and the completion of Kingfisher plc’s divestment of Brico Depot Romania
The Suppliers’ View
Supplier growth through acquisition continues across multiple segments with aggregates business Breedon Group plc benefitting in its latest trading update from its US acquisitions of Lionmark Construction Companies, LLC and BMC Enterprises. To learn more click here.
Timber saw continued consolidation, with Södra acquiring its Dutch and Belgium channel partner Smartt Timber as it continues to grow its important Dutch market. Click here to read the details.
Within the KBB space, Midea Group completed its acquisition of Teka Group strengthening its global appliance presence. Click here to learn more. Within the same space, bathroom manufacturer Roca Group has acquired a majority stake in antoniolupi design spa to broaden its premium LAUFEN Bathrooms offering. To read more click here.
In an interesting and growing trend, particularly within merchants and contractors, WETROOMS INTERNATIONAL LTD. has become employee owned through an Employee Owned Trust. To read more click here.
Within the Ironmongery space, door hardware specialist UAP Limited has been acquired by Allegion, to complement its security hardware solutions and non-residential business. Click here to read the details.
To accelerate its modular capability, MMC provider Thurston Group has acquired the assets of Alsim System Buildings out of administration to form part of its Cabins division. To learn more click here.
Recent Trading statements have provided a very mixed picture across the building materials landscape:
Following its previous four-month trading update, Forterra saw a 22% increase in revenue in its first quarter, attributed to increased housebuilder demand. Equally positive was its stated aim to increase production at both its Desford site and restart production at the recently renovated Wilnecote factory. Click here to read more.
In contrast, as part of its trading update, Marshalls plc issued a profits warning, citing strong headwinds within its landscaping market despite strong growth within its Marley roof tiles and solar (Viridian Solar) division. Worringly too for product availability, a partial site closure is planned to assist cost savings. To learn more click here.
In a positive sign within the MMC space, Premier Modular reported stable revenues and, importantly, improved cashflow and increased equity with profitability within its European ventures forecast within the next 12 months. Unlike many of its peers, the rental market has provided some surety of demand. Click here to read the results.
Investment by suppliers to grow future capacity continues with several factory investments targeted at reducing carbon within their production processes:
Saint-Gobain has committed to invest in a new low-carbon stone wool insulation plant, reflecting a multi-million pound commitment within its UK manufacturing capability. To learn more click here.
In a similarly strong commitment, Knauf Insulation has announced plans to build a £170m new rock mineral wool factory in North Wales, showcasing new renewable technology with the UK’s first submerged arc furnace electric melting technology, which will significantly reduced embodied carbon. Click here to learn more.
In an innovative move, KBB appliance manufacturer BORA is increasing its manufacturing capability by building a new vertical factory at its existing Austrian manufacturing base and, as the name suggests, building the production line vertically boosting its ESG credentials. To read more click here.
Within the drainage space, Brett Martin Ltd has committed its largest single investment with a £15m investment in developing its Mallusk site, to support its continued growth. Click here to read more.
Insolvency wise, XL Joinery Ltd entered administration raising concerns regarding resilience of joinery supply chains with its exposure to both housebuilding and RMI customers. To read more click here.
Merchant Buying Groups
As part of its core offering to its buying group members, NMBS is able to offer members the ability to streamline their ordering process using NMBS’s One Place offering, providing straight through processing (STP) reducing the time and cost of merchants placing purchase orders and processing purchase invoices with their existing 300+ members. For merchant members who have yet to explore the benefits, click here to understand more.
In an interesting development within the US Buying group space, The Principle 6 Cooperative has been created to share best practice between co-operatives and buying groups who are member owned, and to provide a collective voice to the Co-operative movement. Although in its infancy, the concept of collaboration between buying groups for their members betterment is an interesting concept and, within the UK Building materials industry, could provide an accelerator to the aims of the existing UK member owned light and heavy side buying groups. Click here to understand more.
Similar joint initiatives within the Buying Group community are being seen across Europe. In a positive step forward, NMBS has become a member of EURO CRAFT SAS – a pan-European buying group made up of six members operating in 25 countries that will further strengthen the benefits for each of the respective buying groups members and supplier partners. To learn more click here.
Industry Trade Associations
In a positive sign that momentum is growing, the first five shareholders of Building Materials Digital Services (BMDS) – the joint venture Builders Merchants Federation Ltd and NMBS were announced – Bradfords Building Supplies Ltd, Epicor and buying groups Fortis Merchants, National Buying Group LLP and h&b BUYING GROUP LLP. With its stated aim of created an industry data pool ‘by the industry, for the industry’, it has precedent with the Electrical Distributors’ Association (EDA)’s EDATA. Click here to read more.
In a really interesting article to help understand the importance of the Code for Construction Product Information (CCPI), the main areas covered by the Construction Products Reform Green Paper are discussed, and the value of certification of products and the 11 tenants of CCPI are re-enforced. To read the full article click here.
The Home Builders Federation published a positive response for merchants and suppliers to the upcoming Future Homes Standard, which mandates the use of solar panels by default – aiming to drive up adoption from the current four in 10 new homes that have solar PV installed. Click here to read the response.
In a significant step towards improving the speed at which contractors and merchants are paid, the NFRC has welcomed the Government’s Small Business Plan seeking to remove late, short and non payments from the industry which will help merchants with their trade accounts immeasurably. To read the article click here.
As merchants continue to invest in the training and development of their teams, the Institute of Builders Merchants (IOBM) provides an opportunity for your team to promote their own continuing professional development. With significant benefits to individuals ranging from access to CPD training to sharing best practice through its mentoring programme, the IOBM provides a real opportunity for merchants, as well as suppliers. To understand more click here.
Merchant Insights
When investing in training, merchants need to consider understanding what training is needed for each of their team using a simple one pager Training Needs Analysis (TNA), and equally importantly, understanding where to find training and how to fund it. In terms of people and functional skills training, the Builders Merchants Federation Ltd (BMF) is an excellent provider of these courses, with experienced trainers and courses tailored to merchants needs – all available from your local BMF Regional manager. To learn more click here.
When it comes to product training, as “people sell what they understand”, there are two key sources. First is online training, either provided by manufacturers with their online learning platforms such as Knauf Insulation or from trade associations such as the Bathroom Manufacturers Association or the BMF Campus. The second source is in branch with customers, often on a trade morning where the shared experience of your colleagues training alongside their customers further develops that customer loyalty and willingness for customers to ask for help when needed.
The growth in plant and tool hire offerings by merchants has proven to add value to the merchants offering this service, with the ability to offer a ‘one stop shop’ to their customers. Although larger merchants have tended to extend their offering by purchasing their own fleets, opportunities exist for smaller merchants to be able to do the same. Hire partnerships with providers such as HSS Hire can offer an added value. To see how click here. As an alternative example, working with easyHire can deliver the same benefits. Click here to read more.
For many merchants, sustainability is still seen as a cost rather than as an opportunity to both drive efficiency in their own business and support their customers to grow their business. Numerous examples exist of merchants who have recognised the opportunity within their business, the most recent being Merritt & Fryers Ltd who have become the latest merchant business to sign up to the Construction Leadership Council Construct Zero Business Champion. To see how click here.
When looking how to help customers growing their business, the latest Sustainability Survey by NBS | Powered by Hubexo found that more than 50% of architects would not specify manufacturers without sufficient sustainability data (LCA/EPD), and instead would “only specify or select manufacturers with above average sustainability credentials”. As a merchant, it is therefore important to ensure that your buying group and preferred suppliers have this at the heart of their category strategy to ensure you have the best opportunity to win the sale. Click here to read more.
Merchant Case Studies
With the current difficult trading conditions being experienced by merchants, it is imperative that as a merchant, you are able to obtain your “share of wallet” from your customer. To do that, you need to know what your customer is currently buying from you and then, based on the type of customer they are, what they could be buying from you but for whatever reason, are buying elsewhere.
Moorgate have shared their experiences regarding Customer Segmentation and the steps involved to be able to do this for your own merchant business. To understand the process 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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