Stronger fourth quarter wraps up a solid year for merchants

The Builders Merchant Building Index (BMBI) saw strong growth in 2017. Total Q4 2017 sales to roofers, builders and contractors were up +6.3% on Q4 2016, delivering stronger growth for the quarter than the running average, which in turn helped to push the annual growth numbers. Overall, merchant sales in 2017 finished 4.8% ahead of 2016 by value.

Looking at Q4 in detail, total growth was supported by the two biggest value categories, Timber & Joinery (+7.3%) and Heavy Building Materials (+6.4%). A number of other product categories contributed to the strong finish, notably Plumbing, Heating & Electrical, and Tools (both up by +7.7%), Ironmongery (+7.3%) and Kitchens & Bathrooms (+6.6%).

December slowed in comparison to both Q4 and the annual totals, but an extra trading day in 2016 hides the true performance. Growth per trading day grew faster than the annual average at +5.7%. Timber & Joinery at +8.6% was a major contributor, but internally focused categories – Plumbing Heating and Electrical +10.1%, and Kitchens & Bathrooms +8.9% – performed strongly year-on-year

Andy Williamson, Group Managing Director IKO PLC, BMBI’s Expert for Roofing Products says: “It’s been a mixed picture for roofing in quarter four. Poor weather and storms at the end of 2017 damaged roofs, creating RMI work for roofers. Nevertheless, it’s difficult to get a clear picture overall of RMI trends. Political uncertainty and Brexit negotiations have sapped confidence and indecision is holding markets back.

“Like other manufacturers, we’ve become ambassadors for innovation. We’re sold on the benefits of innovation to end users, contractors, specifiers and merchants. But innovation also changes markets, and there are downsides to change.

“Innovations add value by improving product performance and extending product lifetimes, so customers enjoy more years of trouble-free performance. Higher performing roofing felts mean longer lifetimes which carry better product guarantees, rising to 15 years in some cases. That’s a big benefit to customers, but longer lasting products get replaced less often, which reduces the demand and the market for suppliers.

“In contrast to RMI, poor weather through the winter months was bad news for specification work with many projects on hold because bad weather prevented work on the roof. Longer lasting products with longer guarantees are also impacting on specification work. Some hot melt products now come with 40 year guarantees.

“To summarise, private housing and the promise of large infrastructure projects continue to drive construction. We hope we start to see the promise of this specification work materialise!”

BMBI Experts speak exclusively for their markets, explaining trends, issues and opportunities.