If you want to know what’s happening in the building
industry - volumes, prices (and, if they’re directors are feeling indiscrete, which
major customers are not paying their bills) - ask a builders’ merchant. As
such, Travis Perkins is as good a bellwether as they come. The UK group’s
Interim Management Statement for Q3 presents a useful snapshot for companies up
and down the supply chain.
Overall, the picture is encouraging: like-for-like sales
(equalising for different numbers of trading days and store openings) rose 6.3%
compared with the same period in 2012. This shows improving momentum, since the
increase for the year to date was a more modest 2.8% versus the same nine
months in 2012.
But there was a marked divergence between the trade
divisions, which serve a wide range of small to largish builders, and the
DIY-focused consumer unit. Both General Merchanting and Specialist Merchanting
delivered Q3/Q3 growth of 10.7% and 10.6% respectively and Plumbing &
Heating (which competes with Wolseley), 5%. But “challenging” retail markets
meant Consumer, which includes Wickes and Tile Giant saw a completely flat
trend, having recorded an 8.6% spurt over May and June of this year.
A similar contrast held in pricing. Deflationary pressure,
although still negative, began to ease in the quarter, but Wickes “continued to
experience more pronounced deflation”.
Looking forward, soon to retire Chief Executive Geoff
Cooper, signalled that, “whilst still early in the recovery of our markets”, signalled
further recovery into 2014 on the trade side as owners and occupiers reacted to
long overdue new build investment and maintenance.
But it looks as if the stuttering performance of the retail
side reflects a broader uncertainty among consumers that grates with the overall
media picture of growth. This appears unlikely to improve until there is a substantial increase in housing transaction
numbers and improved household balance sheets. The former may be helped by the
second stage of Help to Buy, but the latter is challenged by ONS data shows
inflation continuing to outstrip earnings growth).
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