BMF BMBI Q1 2018 Report and Comment – OUT NOW

BMBI Expert Andy Williamson, Group Managing Director IKO plc, comments exclusively on Roofing Products for Q1 2018.

Following a mixed picture in Q4 2017, this first quarter started much more positively for roofing. Storms and poor weather in January and February generated demand for roofing repairs and replacements. Snow in March however brought business to a halt for many installers and its clash with the Easter break compounded the problem. The Construction Products Association (CPA) estimated that lost working days due to the snow cost construction £1.6 billion. Half of this loss may be recoverable over the course of the year but it’s a big hole to fill.

Housing has been the growth driver for RMI, but we expect this to slow in coming months. In April, Halifax reported the biggest decline in house prices since September 2010. Bad news from some of the UK DIY sheds is also concerning. In March, a credit insurer withdrew credit insurance from some Homebase/Bunnings outlets. Credit was withdrawn following poor results and owner Wesfarmers’ announcement that they’d mishandled the acquisition and could abandon the UK. B&Q is also under pressure, with Kingfisher reporting a decline of 5.1% in Q4 due to softening in demand for big ticket items such as kitchens.

The specification market has been hit too. The closure of Maplin and Toys‘R’Us means that fast growing retailers like Lidl are pausing plans to build new stores, while they look at options to move into empty retail units. This must impact sales volumes for large commercial projects.

Online selling is also an increasing disruptor in the RMI market, with substitute products readily available, making it easy for customers to switch to a different brand of roofing felt.

On a brighter note, we’ve yet to feel the full impact of Carillion. While jobs are being delayed for six to nine months, they’ve not been cancelled. However, the shortage of labour and skilled contractors is affecting project starts and completions.

Although the industry has many challenges, there are also opportunities to build share by diversifying into new areas outside the merchant market, such as highways, or offering added value solutions to avoid competing on price. It’s also important to keep encouraging best practice in roofing, and we’ve been pleased to see the positive adoption of the new Safe2Torch initiative. We will continue to support this, as well as invest in the development and training of roofing contractors to encourage consistently high work standards.

Download the full 2018 Q1 report here