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The Freefoam Plastics Roofline Report

Roofline grows as more installers enter the market

Sales, quarter-on-quarter

A net* 36% of roofline stockists and installers reported better sales in February to April 2007 compared with November 2006 to January 2007.

* The net balance is the difference between the percentage of companies reporting an increase over those reporting a decrease.

Large firms (net 47%) did better than mid sized (net 38%) and small firms (31%). More stockists and installers in the North (net 42%) saw an improvement than firms in the South or Midlands (34%).

On balance 49% of specialist stockists continued to report growth but specialist installers saw no change in sales.

February to April 2007 sales compared with the previous three months by company size
SizeIncreaseDecreaseSameTotalBase
Small49%18%33%100%45
Medium48%10%42%100%40
Large53%7%40%100%15
Total49%13%38%100%100
February to April 2007 sales compared with the previous three months by region
RegionIncreaseDecreaseSameTotalBase
South46%13%41%100%46
Midlands50%14%36%100%28
North54%12%34%100%26
Total49%13%38%100%100

Sales, year-on-year

A net 45% of stockists and installers increased sales in February to April 2007 compared with the same three months of last year (chart 1). Large companies (net 53%) reported growth but small and mid-sized firms (44%) also sold more. Stockists and installers across the country saw an increase in sales.

On balance, just over one in two specialist stockists sold more roofline compared with a balance of just under a third of specialist installers.

Sales forecasts

Expectations remain strong with a net 68% of stockists and installers forecasting increased sales in the next three months (May to July 2007) compared with the previous three months (chart 2). Few expect sales to fall.

Small firms (net 82%) are more positive than mid-sized or large firms (63% and 40% respectively). More stockists and installers in the South and Midlands (net 72%) expect growth than firms in the North (58%).

A net 74% of specialist stockists anticipate better sales over the period but specialist installers (58%) are positive too.

Year-on-year a balance of 49% of stockists and installers expect sales to increase in May to July 2007 compared with the same three months of 2006 (chart 3). Large firms (net 60%) are most upbeat but small (49%) and mid-sized firms (45%) are also positive. Across the country, firms in the Midlands (net 68%) are more bullish than those in the South (44%) or North (39%).

Both specialist stockists (net 49%) and specialist installers (42%) forecast growth.



“We are seeing increasingly more specialist roofline installers among our customer base as home owners look to replace their fascias and soffits and avoid cowboy installations.

There is also a noticeable increase in PVC-U window installers diversifying into roofline. Customers are having their windows fitted and asking installers to return for their fascias and soffits. This is a growing opportunity for window installers, and with the increase in specialist installers too, there are certainly more players in the market, which is good news for stockists.”
Mr A B Howlett, Owner
Polytrade UK

Profits

With sales growth and positive expectations, it is not surprising that a balance of 60% of stockists and installers also forecast better profits over the next 12 months compared with the previous 12 months (chart 4). Expectations are strong across firms of all sizes and in all regions.

Both specialist installers and specialist stockists (net 62%) anticipate an improvement.

Employment

A balance of 12% of roofline stockists and installers took on more staff compared with three months ago.

Capacity

A net 64% of roofline stockists and installers interviewed said they were currently working at capacity (chart 5).

Buying Prices

On balance 68% of stockists and installers saw costs of materials go up compared with three months ago (chart 6). None of the companies interviewed reported a drop. Large firms (net 87%) and those in the North (81%) were most affected.

Both specialist stockists and specialist installers (net 65%) reported higher material costs.

Selling Prices

Rising costs prompted a net 40% of companies to put up their prices compared with three months ago (chart 6). More large (net 53%) and mid-sized firms (48%) raised prices than small firms (29%). Stockists and installers across the country increased prices.

Significantly more specialist stockists (55%) put up prices than specialist installers (16%).

A balance of 58% of stockists and installers also expect to raise selling prices over the next 12 months compared with the previous 12 months (chart 7). Firms of all size, type and in all regions forecast higher prices.

Stock levels

A balance of 38% of specialist stockists reported an increase in stock levels compared with three months ago.

Investment intentions

A net 32% of stockists and installers expect to invest more on buildings and equipment over the next 12 months compared with the previous 12 months. Again, more specialist stockists (net 47%) expect to invest than specialist installers (23%).

Prospects

A net 26% of stockists and installers are more optimistic now about the overall prospects for the roofline market than three months ago. Confidence is broadly similar among firms of all sizes. Companies in the North (net 39%) and South (26%) are more buoyant than those in the Midlands (14%).

Specialist stockists (net 36%) are again more optimistic than specialist installers (19%).

“There is definitely a growing trend in roofline replacements, influenced by keeping up with the Jones'. People don't want to be left behind and so if one neighbour in the street has their fascias and soffits replaced then this will trigger others to enquire and ask for a quote.

Home owners are also more aware of the benefits of installing PVC-UE roofline products over other materials.

In our area we are experiencing strong sales and there is at least 70% of properties still to go for - which is good news for us!”
Terry Downs, Installation Manager
Mark Russell Glazing Ltd

Problems

Price cutting in the market (56%), margin squeeze (55%) and supplier price rises (51%) were the main problems for stockists and installers in February to April 2007. Price cutting was also the single biggest problem, mentioned by 17% of those interviewed (chart 8).

The Internet

Seventy percent of respondents say they use the internet regularly i.e. daily or weekly (chart 9) and 32% use it to place orders with suppliers.

Although 87% of firms interviewed have a website, just 27% say they offer the option for customers to order online in some way or another.

Overview

“The Global economy is in good health and still looking strong as we enter the second quarter of 2007,” says Mike Rigby, whose company Rigby Research produced this report. “Japan, the world’s second largest economy, is growing more quickly than expected. The US is also looking stronger. Although the US housing market and house building is weak, strong consumer spending should continue to support growth. The Eurozone economies are improving and China and India show no sign of slowdown.”

“In the UK, three interest rate rises since August may have cooled the housing market enough to contain house price inflation. Debt levels and house prices affect the decisions consumers make and their confidence in the economy. With price stability, confidence is rebounding.”

“Strengthening consumer confidence means that big ticket home improvements should pick up. With more homeowners staying put and improving their homes rather than moving, and stockists and installers reporting growth, 2007 should be a good year for roofline.”

Comment

“Pick up a newspaper and there will be a story on climate change and its effects on the front page,” says Tony Walsh, Managing Director of Freefoam, who sponsor this survey. “Our climate is changing at a much faster rate. Seasons have become less predictable and we can expect more storms, flooding and rising temperatures.”

“Rising temperatures greatly increase the impact and effect of the higher levels of Ultra Violet (UV) light, which is increasing by about 2% a year in the UK. We know that exposure to UV light from the sun damages skin and prolonged exposure increases the risks of skin cancer. But rising UV harms other things too, including building plastics such as roofline and cladding, affecting product performance and strength.”

“To date most roofline products have not been designed for the levels of UV light we are experiencing and there are questions about their longevity under these high UV levels. Three to four parts per hundred of TiO2 used to be enough to protect products from UV. But now five parts is needed, which is what our products have.

“It is important we avoid a repeat of the pinking crisis where the industry buried its heads in the sand thinking the discolouration problem would just disappear. Climate change is here and manufacturers need to act now. Homeowners appreciate PVC-UE roofline because of its perceived high performance, durability and low maintenance but there will be a lot of unhappy homeowners if products fail much earlier because of rising UV levels. Do your products have enough protection?”

The Freefoam Roofline Report, a quarterly trends survey, is produced by Rigby Research, and sponsored by Freefoam Plastics Ltd.

The survey covers a representative sample of 100 roofline installers and stockists, including builders’ merchants, of PVC-UE cellular foam products. Telephone interviews took place between the 4th and 15th May 2007 across a balanced spread of size of firm and geographical area.

For survey details call Stephanie Bradfield on (01453) 521621.

© Rigby Research, 2007

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