Mild autumn boosts bottom line for builders merchants

The final quarter of 2016 saw sales growth in the UK builders merchants sector.

Generalist merchants generated annual revenues in excess of £5.44 billion, representing sales value growth of 5.2%, according to the BMF’s Builders Merchants Building Index Q4 report, produced with GfK.

Q4 2016 total merchant sales were up 5.5% on Q4 2015, with the mild, dry autumn providing ample opportunity for external works – Heavy Building Material sales were up 7.1%, driven by roofing product, lintels and plasterboard/plaster products. Ironmongery also performed well, up 5.6%.

Despite the mild weather, Workwear & Safetywear sales did rise in Q4 compared with Q3, up 6.1%.

“Encouraging results despite Brexit fears”

BMF MD John Newcomb said: “Despite fears around the Brexit vote mid year, another strong set of results for the final quarter of the year is certainly encouraging. In addition to GfK’s national data in the BMBI report, the BMF’s own Sales Indicators, which confirm that the final quarter of 2016 wrapped up three years of growth in the sector, provide a valuable insight into regional sales. It is interesting to note that some of the highest percentage increases are currently occurring outside London and the South East, which are normally considered the busiest areas.

“Looking forward, we also found a largely optimistic sentiment in the first post-Brexit State of Trade survey of BMF members, with the majority forecasting further growth in Q1 2017.  Against this, however, respondents cited economic uncertainty as the largest expected constraint on sales over the next 12 months, along with uncertain future demand and the impact of rising prices.”

GfK Channel Manager, Ricky Coombes added that consumer confidence levels provide a good indicator of potential future spend on areas such as property and home improvements, which directly impact builders merchants sales. He said: “GfK’s Consumer Confidence Barometer at the end of 2016 was at the same level as post-recession 2014.  Confidence is being propped up by consumers’ positive outlook on their own personal financial situation.  Even though they expect price increases in 2017, these are yet to be felt.”

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