Merchant Matters Newsletter

Welcome to this month's edition of Moorgate Management's Merchant Matters, where we look at the most current news and related stories from around the building materials industry, to help bring you the information you need to grow, adapt or turnaround your business and plan for the future.

Monthly Market Review

The Oct-24 flash PMI index numbers from S&P Global show slower economic growth, slumping to its lowest level for nearly a year, with dampened business confidence and spending ahead of the Budget. More positively though, input cost inflation continued to drop to the lowest in nearly four years, allowing more confidence for future interest rate reductions In Q4-24. Click here to read more.

The effects on the construction industry of the first 100 days of Labour was covered in an interesting webinar by Barbour ABI , looking not only at the current Construction climate, but also at the construction outlook by sector (with an interesting view on quarterly new home output and targets) together with its impact on Net Zero, heat pumps and specifications. To read more click here.

The latest Aug-24 numbers published by the The Insolvency Service reported 329 construction businesses becoming insolvent (including ESS Modular and BECK Interiors ), and 4,310 in the eight months to Aug-24, representing an 11% increase on prior year. These have been analysed by BCIS and show a particular exposure to specialised construction activities companies (as opposed to building and civil engineering) together with an analysis of both the factors driving this and profit warnings on listed construction companies. Click here to learn more.

The Merchant View

The latest Builders Merchant Building Index (BMBI) for Jul-24 show monthly like-for-like sales performance at -(7.9%), being improved from last month, with the last three months' performance (May-Jul-24) showing a similar -(7.9%) like-for-like sales performance compared to the same period last year. Category wise, renewables continued to underperform along with Kitchens and Bathrooms, but there were improvements in Timber andJoinery, and Heavy Building materials. To learn more click here.

The Jul-24 Plumbing & Heating Merchant Index (PHMI) numbers show a similar positive trend, with monthly like-for-like sales performance in the month at -(4.4%) being an improvement on the previous month, and the three months' sales performance (May-Jul-24) being -(3.8%) like-for-like, reflecting an improved trend. To read more click here.

A similarly more optimistic trend was reported by Timber Development UK with its Jul-24 monthly timber import volumes, showing a 2.9% growth compared to 0.5% in Jun-24, which continued to reduce the year-on-year import volume deficits. This positive trend is reflected by the National Softwood Division's (NSD) forecast for 2025, which predicts a 5% recovery for next year. Click here to read more.

The latest trading update for the three months to Sept-24, published by Travis Perkins plc , showed a -(6.6%) decline in like-for-like sales performance, driven by its merchanting business showing a -(8.2%) like-for-like sales decline, with volume continuing to decline despite their recent changes to optimise price. To read more click here.

Interim results for the half year to Jun-24 published by CMO Group PLC showed a -(17.0%) decline in like-for-like sales with Tiles (-36.3%) and Building (-13.0%) being the main drivers. Jul-24 and Aug-24 numbers showed an improvement with like-for-like sales -(9.1%) down. To learn more read here

The most recent results from Lords Group Trading for the half year to Jun-24 show that revenue decreased by -(6.1%) like-for-like in the period, reflecting a -(9.3%) like-for-like revenue decline in merchanting and a -(3.2%) decline in plumbing and heating. To read more click here.

Merchants continued to face challenging conditions, with the latest administration of Scunthorpe-based BUILDERS' MERCHANT COMPANY LTD . Click here to read more.

Merchants: Acquisitions and Organic Growth

The emerging trend of acquistion growth by independent regional merchants continued.

Robert Price (Builders' Merchants) Ltd continued its growth within roofing with its acquisition reported in Builders' Merchants News of Willis Westcott (monmouth) Ltd , offerring its customers an even broader product range, as seen with the recent acquistion of ESSEX TIMBER & PLYWOOD LIMITED by Chandler Materials Supplies Ltd . To learn more click here and here.

In a similar vain, the acquisition announced by Lords Group Trading of Ultimate Renewables Supplies reflects Lords commitment to support their customers in their transition to cleaner, renewable heating solutions, with the acquisition providing an end-to-end design and commissioning service. To read more click here.

Investments in existing branches continued, too, with SIG plc relocating its Leyland branch to Bamber Bridge.

Investments in new branches and customer experience was evidenced too, with Jewson 's first purpose-built "Branch of the Future" in Farnborough as reported in Professional Builders Merchant . To learn more, read here and here.

Suppliers: Acquisitions and Organic Growth

A similar longer-term view is being taken by suppliers and reflected in their continued acquisition activity.

The recent acquisition by Wyckham Blackwell and Keystone Group of Wilson Roof Truss Ltd (strengthening existing capabilities and geographic reach) and Kilwaughter Minerals Ltd by Saint-Gobain (strengthening offerings in light and sustainable construction) reflect a confidence in the market. To read more click here and here.

Investment in existing manufacturing capabilities are also being seen, with the ongoing investment by Ibstock Plc in both its Atlas factory and Nostell brick slip facilities. Click here to read more.

Similar to merchants, current market conditions are proving challenging to suppliers but the recent acquistion by Bathroom Brands Group of Showerwall out of administration is a positive sign. To read more click here.

Merchant Buying Groups

A really interesting roundtable discussion with members from h&b BUYING GROUP LLP , chaired by Tim Wood and published in Builders' Merchants News discussed how sustainability fits into merchants' plans. One of the key takeaways from this is the role that Buying Groups play in supporting and driving the sustainability agenda, as seen by several of the key initiatives and acquisitions made by their members, most notably Bradfords Building Supplies Ltd and Lords Builders Merchants . To learn more click here.

Industry Trade Associations

Significant progress is being made by both NMBS and Builders Merchants Federation Ltd in supporting merchant and supplier members to recruit apprentices into the Building Materials sector as part of Industry's awareness campaign to attract and retain talent. NMBS has helped recruit more than 150 apprentices within the independent merchant sector, supporting the Builders Merchants Federation Ltd pledge to achieve 15,000 apprentices across its membership of merchants and suppliers by 2030. Click here to read more.

The next iteration of the Builders Merchants Federation Ltd Product Data Template v2.0 has been released, which now incorporates both timber and sustainability tabs. Created by the Building Materials industry, for the Building Materials industry, the working groups have represented all industry stakeholders from merchants, distributors, suppliers, service partners, buying groups, technology partners and trade associations to ensure that all users of the template have been involved in its development. Equally importantly, it has now been adopted and is in use as the standard across the Building Materials industry.

To understand more and download the template, click here.

Merchant Insights

As merchants and suppliers work to navigate their businessess through the current trading environment, there are times on this journey when they could benefit from asking for help. In this article, we have shared our insights on the most common signs we have seen in our own businesses and within our clients' businesses now, when reaching out to ask for help and advice may help the owners. To read more click here.

Procurement frameworks provide merchants and distributors with another route to market and an opportunity to grow their business whilst supporting their customers. In this article, the concept of procurement frameworks is explained and applies to both public sector (such as Crown Commercial Service ) and Housing associations (such as Fusion21 and Procurement for Housing ) with the article highlighting the benefits available to merchants. Click here to find out more. The most recent example of the opportunity these frameworks represent to merchants is highlighted with the Fusion21 award for Materials Supply and Associated Services Framework, worth up to ￡250m over four years. To learn more click here.

Changing an ERP system can often transform a merchant's business, but understanding when is the right time and what to consider are often overlooked. In this article, we have shared our advice on the considerations when changing an ERP and the suggested steps to follow to ensure that its is successful. Click here to read more.

With colleagues at the heart of merchants, distrubutors and suppliers, the need to understand the new Harassment Prevention Legislation within the Worker Protection Act that come into force on 26 Oct-24 is paramount. For an overview of the legislation click here. For businesess that may not yet have undertaken training with their colleagues, courses are provided. For details of the available training click here.

Merchant Case Studies

We were contacted by a distributor who was facing transport challenges with Class 2 driver retention and recruitment and operational issues including utilisation of vehicles and running costs. To see how we were able to help them, click here to read more.

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 or call 07767 291 379.

Thank you for reading.