Builders’ merchant market is set for 2016 boost

According to a report from the MTW Research on the builders’ merchant market, a surprising 70% of merchants have recorded increase in the revenue and profitability for 2015 with a forecast for more sales in 2016.

The research notes a growth in the heavyside sales during 2015, which is good news for those who supply the construction industry with building products. The report says that ever since 2014, the domestic new builds and the renovations of the commercial facilities have recorded significant growth, and the trend is expected to continue in future.

Even though the growth slowed down in 2015, the need for building materials is still standing strong. The price sensitivity will continue to smoothen in 2016 as a result of the low prices of oil, the stability of the volume demand as well as the decrease of demand for raw materials, especially those coming from China.

The report states that the market sales will grow up until 2019, and even though some markets will vary greatly the overall conclusion is that the building sector is up for some good times.

In 2015, we have witnessed the rebalancing of the builders’ merchants market and rise in the heavy-side sector which is expected to outrun the sector for light-side products in 2016. Despite the fact that the inflation is expected to increase steadily in 2016, there is still a possibility for growth in certain sectors, where some will benefit more than others.

The forecast is that apart from the bigger demand for building materials, contractors will show interest in investing in tools and equipment which is very good news for the merchant’s sector in 2016. This is a big change from the previous few years, when many contractors restrained themselves from buying new equipment and utilizing their resources to the fullest.

Mark Waddy, director at MTW Research commented on the results saying that it is clear that the profitability of most merchants will be strengthened, partially due to the rising levels of debt. The analyses show that the profitability of the merchants will likely increase by about 30% in period of few years which will be a great boost for the market in 2016 and the period that follows.

The builders’ merchants will be able to take advantage of the growth in several areas and different sectors, including the market for building private houses and the market for refurbishment of facilities which will lead to increase of their revenue.

In the MTW Research it is stated that even though the public expenditure of the current Parliament will decline this will be easily compensated by the expected growth in the private sector that deals with refurbishment of old and build of new facilities.

The report also predicts an increase of demand coming from the industrial construction sector and the refurbishment sector, since the businesses are boosting their confidence and support the growth of demand for the builders’ merchants.

According to the data stated in this report, things are looking good for the next few years when it comes to the development in this sector. By 2019 we can expect stabile growth of sales especially since the economy is recovering from the crisis. If during the recession we were working with profit numbers which are 60% less of the current numbers, and still managed to keep the business running, there is nothing to fear now.

As previously mentioned the growth won’t be equal for all sectors and some will benefit more than others but the overall impression is that a bright future is ahead of us. In the MTW Research’s report we can clearly see that there is a positive vibe on the trading conditions and the forecast is good both for the builders’ merchants and their suppliers.