Welcome to this month’s edition of Moorgate Management’s Merchant Matters, where we will be exploring the most current news and related stories from around the building materials industry, to help bring the information you need to grow, adapt or turnaround your business and plan for the future.
Monthly Market Review
The latest S&P Global PMI index for August 24 showed a decline from July 24 and was below forecast, but pointed to a rebound in total business activity, with robust new order growth and the economic backdrop underpinning the recovery in construction output volumes, and near term optimism by construction companies.
The latest Construction Industry Forecast published by Glenigan | Powered by Hubexo for 2024-2026, including commentary from KPMG, sets out that despite near-term challenges from weak economic growth and high interest rates, private housing starts will have a gradual recovery as affordability picks up, with social housing starts following closely behind after the spending review. Click here to read more.
Although the levels of customer insolvencies continue to increase, it is important to note, as highlighted by BCIS, that it is only a 2.1% increase on prior year, with firms providing specialised construction activities being consistently the most affected. With the size of contractors entering administration increasing, most notably with ISG, the pressure on subcontractors liquidity, and the impact on credit risk and credit insurance faced by merchants and suppliers, only looks set to increase. Click here to read more.
The Merchant View
Reports for Jun-24 from the Builders Merchant Building Index (BMBI) show monthly like-for-like sales performance at –(14.7%), with Q2-24 being -(5.8%) down on prior year. The categories underperforming continue to include renewables, and timber and joinery, with the notable inclusion of Heavy Building Materials. To read more, click here
A similar picture is painted by the Plumbing & Heating Merchant Index (PHMI) with Jun-24 monthly like for like being at -(9.3%), and Q2 2024 being -(1.8%) down on the prior year. Click here to read more
Monthly timber import volumes reported by Timber Development UK continue to show improvement, with imports in Jun-24 being 0.5% better than Jun-23. Year on year, for the six months from Jan to Jun-24, volumes of the main timber and panel products were -(3.6%) lower. To learn more, click here.
The latest half-year results for Kingfisher plc for the six months ended 31 Jul-24 showed a positive +5.8% like-for-like performance in Q2 by TradePoint UK, with Screwfix sales in Q2 being slightly lower than Q1 at +1.2% like for like. To read more, click here.
Six month results to 30 Jun-24 from SIG plc showed a -(6.8%) like-for-like revenue decline, with the largest decline of -(14%) being seen in the UK Interiors part of the business, while Roofing is being more resilient with a -(2%) like-for-like decline in the period. Click here to read more.
The challenges being faced by merchants have continued, with the most recent administration announced by FFX Group. To learn more click here
Merchants: Acquisitions and Organic Growth
Acquistion growth by independent merchants continues. The positive acquistion by COWAL BUILDING & PLUMBING SUPPLIES LIMITED of J.K.M. INDUSTRIAL SUPPLY MERCHANTS LIMITED helps extend their branch coverage with the Paisley-based business. Click here to read more.
Similarly, the acquistion by GH Brooks (Harrogate) Limited of Marsland Timber & Building Supplies provides their customers with an extended trade counter network in Wetherby, Harrogate and Guiseley. To read more click here.
The recent new branch opening by Travis Perkins in Whistable provides their existing Kent customers with trade counter coverage between their Canterbury and Margate branches in a move to support existing customer offerings. To learn more, click here.
Suppliers: Acquisitions and Organic Growth
There has been an interesting geographic expansion by Çimsa with its acquisition of Mannok. This is following its previous acquisitions in Spain and the US, with its stated aim of providing a “key stepping stone…in expanding…in Western Europe.” Click here to read more
An innovative supplier solution has been launched by Fibo Intercon – Concrete Batching Plants to help merchants (in this case JTD BUILDING SUPPLIES LIMITED ) by offering value-added services in branch, as an alternative to volumetric concrete for smaller quantities with its automated concrete dispensing stations. Based on the merchants’ premises, it brings customers to the branch and, importantly from a sustainability perspective, reduces material wastage with exact quantity pours. To learn more click here
Market conditions have continued to impact the number of supplier insolvencies too, with the recent adminstrations of Aqualux Showers and IDSurfaces. To read more click here and here.
Merchant Buying Groups
An interesting survey previously published by National Buying Group LLP highlights the need for continued and more extensive dialogue between merchants and suppliers and the benefits that can be derived from such conversations. Of particular interest are the comments made regarding opportunities for both merchants and suppliers with sustainable products. Click here to read more
Industry Trade Associations
Along with the launch of the inddustry’s awareness campaign to attract and retain talent and its website BMCareers.com, the Builders Merchants Federation Ltd Annual Conference also saw the launch of version 2 of the Product Data Template, now incorporating timber and sustainability tabs, to help support merchants with providing consistent and now including EPD data to their customers. To learn more, click here
The first Impact Report published by the Construction Inclusion Coalition has now been published, setting out the significant progress made in its first year, particularly regarding its aim of “Attracting, Recruiting and Retaining Diverse Talent” throughout the industry.
Merchant Insights
The current state of sustainability within the building materials sector has been captured by the Builders Merchants Federation Ltd in its recently published “State of Sustainability Report”, which highlights both the progress made and the opportunities that Sustanability presents to both merchants and suppliers alike. To read more, click here
For those merchants or suppliers still unsure how to commence their sustainability journey, a useful tool has been provided by the Supply Chain Sustainability School (UK), providing free to use tools to firstly assess where you are on your sustainability journey to address scopes 1-3 compliance and then create a learning plan to help guide you and your business together with resources to support this. To learn more, click here.
Looking specifically at the “Opportunities for Merchants with Sustainability” we have set out some of the key areas based on our experience. Click here to find out more.
Merchant Case Studies
We were contacted by a merchant owner whose mixed merchant business was not delivering the expected returns post acquistion and wanted a return to profitability. To learn how we were able to help click here.
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.