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Castle Cement

Quarterly Trends Report

Strong Sales Forecast for Spring?


“Two months ago the 'Baghdad Bounce' lifted the spirits of US consumers and encouraged them to go on a spending spree,” writes Mike Rigby, whose company produced this report. “Now, economists are questioning the strength and sustainability of the US recovery. Has the Bush Government got its policy right? Will the US Federal Reserve's cut in interest rates to a 45-year low of 1% work its magic and re-ignite the economy while staving off deflation?

“New York is many long miles from Manchester. But in today's world we are intimately intertwined. What happens in Tokyo, Berlin, Moscow or Mexico City affects our stock markets, interest rates, investment, and how much we spend as consumers. But what happens in the US matters much more. In sheer size the US dwarfs other economies. When America storms ahead it pulls us along in its wake. When it sneezes, we come down with flu. Right now, with Japan and Germany in trouble and much of the EU stumbling along at half pace we could do with some help.

“In the UK we thought we were doing quite well, a lot better than our neighbours. But the Government has revised down first quarter figures to a level below the Germans. And most economists challenge Gordon Brown's forecasts. The pressure is on Mervyn King, the new Governor of the Bank of England and chairman of the MPC to cut interest rates and revive the economy.

“In the UK house prices are rising more sedately. Houses are selling more slowly, according to Rightmove, the property website. Asking prices in June were 1.3% higher than May. High stocks of properties on estate agents books are cooling the house market. A year ago it took an average 47 days to sell a property. The expected waiting time today is 63 days.

“Mortgage borrowing is still strong though a high proportion of mortgages are for home improvements rather than house buying. More worryingly, as prices rose, the number of first time buyers has fallen to its lowest level in 10 years. Young buyers seeking to get on to the first rung of the property ladder dropped by 41% over the past year from 24,000 in May 2002 to 14,000 May 2003.

“Set against such negatives, housebuilders report good results, and homeowners continue to spend. Builders' merchants and their customers are run off their feet and the long-term prospects for building have rarely been better. Let's keep things in perspective.”

Highlights This Quarter:
  • A net 55% of outlets recorded increased cement sales in March - May compared with the previous three months.
  • Small and medium-sized outlets (net 66%) grew sales compared with large outlets (18%).
  • Compared with the previous quarter more merchants in the Midlands (net 80%) upped sales than elsewhere.
  • Compared with the same period last year, a net 39% of merchants increased sales.
  • Regionally outlets in the Midlands (net 60%) saw most widespread increases year-on-year.
  • Merchants are optimistic with a net 39% expecting to increase sales in the next 3 months compared with the last quarter. In the Midlands, merchants were the most confident.
  • A net 52% of merchants expect increased sales in the next quarter compared with the same time last year.
  • Medium-sized outlets (net 55%) have higher sales expectations for the next year than small (53%) or large (27%) outlets.

Cement Sales - Overall Trends

Just over six in ten merchants increased cement sales in the last three months compared with the previous quarter. Just under one in ten merchants saw a decrease in sales and a little under three in ten saw no change.

A useful way to look at the results is by the net balance of merchants reporting either way. If for example 36% of merchants saw an increase in sales, 16% a decrease and 48% no change, the net balance of 'ups' and 'downs' would be +20% (+36% less 16% equals +20%). Reverse the figures and it would be a drop of -20%. A net balance of zero implies little has changed.

On this basis a net 55% of merchants saw increased sales in this quarter compared with last quarter (chart 1).

Compared with last year cement sales saw a net 39% of merchants increase their sales last quarter compared with the same time last year (chart 2).

Just over six in ten merchants attribute the increase in growth to general builders.

Sales by Size of Merchant

Small and medium-sized outlets (a net 66%) reported increased sales in the last three months compared with large outlets (18%). Year-on-year, large outlets (net 45%) were ahead of small and medium-sized (39% and 35% respectively).

March to May Cement sales volume compared with the previous three months by size of outlet

SIZE OF OUTLETIncreaseDecreaseSameTotalBase

March to May Cement sales volume compared with the same three months of last year by size of outlet

SIZE OF OUTLETIncreaseDecreaseSameTotalBase

Sales by Tonnage

Merchants with annual cement sales above 1000 tonnes per annum through a single branch (net 49%) outperformed merchants selling less than 1000 tonnes per annum compared with the same period of last year.

Sales by Region

Quarter on quarter figures show firms in the Midlands (net 80%) did significantly better than those in the South and the North (55% and 50% respectively). Scotland was behind other regions with a net 20% of firms recording higher sales.

March to May Cement sales volume compared with the previous three months by area


March to May Cement sales volume compared with the same three months of last year by area

Midlands 68%8%24%100%25

March to May Merchant Sales Volume of Cement by Customer Type and Region

AREAHouse BuildersGeneral BuildersTradesmenDIYTotal

Product mix

Eighty-one percent of merchants interviewed sell Ordinary Portland Cement. Seventy three percent sell Air Entrained Cement, 38% sell Masonry Cement and 63% sell other types of cement.

Types of cement product sold by outlet size

Ordinary Portland79%75%96%81%
General Purpose Air Entrained 66%73%86%73%

Quarterly sales forecasts

A net figure of just under four in ten outlets expect to increase sales in the next quarter compared with the previous quarter (chart 6). More medium and small sized outlets (50% and 40% respectively) expect increases than large outlets (18%). More Independents (net 45%) expect increases than Nationals (31%). Significantly more merchants in the Midlands (net 72%) expect increases than elsewhere.

Year-on-Year sales forecasts

A net 52% of merchants expect to increase sales in the next three months compared with the same three months of last year (chart 7). Small outlets (net 58%) have higher expectations than medium and large outlets (53% and 41% respectively).

The Midlands (net 76%) are more optimistic than the South (55%) and the North (46%). Scotland was behind with 13% of those questioned expecting an increase.

Independents expect to do better than Nationals.

Seventy percent of builders' merchants who forecast growth in the next three months credit the increase to greater activity among general builders.

A net 48% of merchants interviewed forecast increased sales in the next twelve months compared with the previous twelve months. Small and medium-sized outlets expect significantly more sales over the next year than large outlets (27%). Merchants selling less than 300 tonnes per annum (net 69%) expect increased sales in the next year. Forecast growth is attributed to new housing and development areas in the UK.

“Three months ago we started buying 5kg bags of Dry Mixed products. Before that we would mix a bag of sand and cement ourselves for our customers, but because of demand we thought the best thing would be to buy it already bagged. “At first we bought 20 bags, which took a few weeks to sell, but now we are buying 20 bags per week which is a 60% increase from when we started. “It is mostly the DIY market who buys this product for any small jobs of repair and maintenance.”

Mr R J Griffiths, Owner
Bush & Griffiths, Pontypridd

Price forecasts

A net 45% of outlets expect to increase prices over the next twelve months (chart 8). More large and small merchants (net 50% and 47% respectively) expect to hike prices than medium-sized merchants (40%).

More Nationals (net 55%) expect to put up prices than Independents (38%). More merchants in the Midlands (net 52%) expect to increase prices followed closely by other regions (chart 9).

The majority (net 94%) of those planning to increase prices are simply carrying through supplier price rises. Eight percent are also looking to improve profit margins.


A net 14% of merchants are more optimistic about prospects for the cement industry than compared with three months ago (chart 10). Small merchants (net 21%) are optimistic but large outlets expect sales to drop off. Merchants in the South (net 26%), Independents (16%) and outlets selling between 300 and 1000 tonnes per annum, are most positive.


Increased competition was highlighted as the man problem by builders' merchants.

“There has been a significant demand for Dry Mixed Products in the DIY market, but also plumbers buy more. We've seen an increase of 10-15% this year compared with last year.

“There is less waste involved with the 5 and 10kg bags and waste is a big issue these days. The reason for more sales of this product in the DIY market is because people want to make their property look attractive. Part of this is to landscape their gardens themselves.

“This market is growing and we are looking for the same sort of increase for next year.”

Mr Keith Shemilt, Branch Manager
SC & P Jones, Wilmslow

Internet usage

Thirty percent of merchants questioned now use the Internet daily. Eleven percent use it on a weekly basis and three percent monthly. The Internet is rarely used by 16%, and 40% never use it (chart 13).

Twenty five percent of those who do use the Internet do so to place orders with their suppliers and forty eight percent say that customers can order off their website.


"Looking back at my comments over the past two years there are some themes that particularly stand out", says Derek Mayhew, Marketing Manager of Castle Cement who sponsor this survey. "Changes in building regulations have had a great impact on the performance of new build and RMI (repair, maintenance and improvement).

"Changes to the market, for example home improvements such as conservatories, extensions or hard landscaping have opened up fresh prospects. Changes too in the long-term demand as the need for housing grows. Whatever the short-term needs, the long-term prospects for the building products are strong.

"The structure of the industry is rapidly changing with dynamic competition for traditional builders' merchants from DIY sheds who are now turning their attention to trade.

All these factors affect product, what we expect from them and how they are supplied.

Taken together these are major opportunities for builders' merchants and their supplier - partners to exploit and boost added value. They are also major threats as the foundations shift beneath merchants' feet. These are the components of major change for better or worse depending on how merchants react to these opportunities.

This is the 25th issue of the Castle Cement Quarterly Trend report and after six years this report will be the last unless we find a sponsor.

If you would like to sponsor the survey please contact Fiona Lund at Michael Rigby Associates on 01453 521621.

The Castle Cement Report, a quarterly trends survey, is produced by Michael Rigby Associates, and sponsored by Castle Cement Ltd in conjunction with Builders' Merchants News. The aim is to keep a finger on the market pulse, and to monitor merchants' views and expectations of market movements in cement products.

Michael Rigby Associates specialises in research based marketing and consultancy for the home improvement, building materials and window markets in the UK and Europe.

The survey covers a representative sample of 100 builders' merchant outlets. Telephone interviews took place between the 10th and 16th June 2003 across a balanced spread of size and type of merchant and geographical area. Numbers employed was used as an indication of size. The size categories of merchant outlets are small (1-9 employees), medium (10-25 employees) and large (over 25 employees).

Further information: Kirsten Storgaard, Michael Rigby Associates Tel: (01453) 521621
Or download the full report from:www.521621.com
Castle Cement Website: www.castlecement.co.uk

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