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[April 2008]
Construction Product Manufacturers Remain Positive Despite Sharp Slowdown in Sales
The UK construction products industry experienced its slowest quarter for sales in over two years according to the latest Ernst and Young/Construction Products Association Activity Barometer. The survey records a score of 51, just above the 50 ‘no change’ mark and well down on the 69 recorded in the final quarter of 2007. Sales of heavy side products actually declined in the three months and the barometer only remained positive by virtue of reasonably strong sales of lightside products.
Commenting on the results, Dr Noble Francis, Economics Director for the Construction Products Association, said: “The construction industry is not immune to the global economic problems and the general lack of liquidity. Housing has been particularly badly affected with a dramatic slowdown in new housing starts in the first quarter. Overall, however, the construction products industry remains cautiously optimistic in the short term with the majority of firms anticipating modest growth in sales over the next few months.
“Looking further ahead, the Association’s latest forecasts for construction output anticipates continued growth in the construction industry over the next few years, helped by high profile schemes such as the Olympics projects and Crossrail.”
Dominic McAra, a Director in Ernst & Young’s Building Products team noted: “The fall in confidence from its high this time last year is not surprising given the current economic environment. We have seen a number of companies experiencing tougher trading conditions in the last half of 2007 and the first quarter of 2008, compared to more buoyant conditions this time last year.
“The immense pricing pressure that is appearing all the way through supply chains is likely to be exacerbating the impact of the general economic conditions on business confidence.
“Lower confidence and the credit crunch also appear to have impacted M&A activity in the sector, with fewer of the larger deals occurring. The 5th April Capital Gains Tax changes are still driving activity in the mid-sized and smaller deals, although even for smaller transactions we are seeing companies limiting their acquisitions to high quality assets.”
www.constructionproducts.org.uk
ENDS