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The Bowater Windows Report - Annual Review
A good twelve months
Quarter-on-quarter salesJust under two in five fabricators increased sales throughout the 12 months to July 2003. The four quarters covered in the report are July-September 02, October-December 02, January-March 03 and April-June 03. The strongest quarters were July-September and April-June (chart 1).
The difference between the number of companies reporting an increase over those reporting a decrease is the net balance, expressed as a percentage. A positive net balance indicates growth, a net balance of zero implies little has changed.
On this basis, sales were strongest in the South (net 45%) in July-September and April-June, as were sales in the Midlands (60%). The North (54%) peaked in July-September and October-December 2002.
Small companies and those selling less than 50 frames a week recorded most improved sales in April-June. Medium sized firms were strongest in July-September. Large companies and those producing 300-700 frames a week recorded strongest sales in January-March. Over the year as a whole large companies (53%) were ahead of small (37%) and medium (34%) sized companies.
Trade fabricators ended the period with the most improved sales. Throughout the year trends were mixed for all kinds of fabricators, but with commercial fabricators strongest throughout the 12 months.
Year-on-year salesYA healthy net 50% of fabricators were up compared with the previous 12 months. Sales were strongest in October-December 2002 for all regions and all sizes of firms. Medium sized fabricators were equally strong in July-September.
Commercial companies saw sales peak in October-December as did retail firms and those with a mix of business. Trade fabricators were ahead in July-September and ended the period on the highest note.
StockStock levels built up from July-September and eased in January-March. A net 17% of fabricators ended the period with higher stocks. The highest stock levels were held by fabricators in the Midlands in July-September (36%). Small firms also had the highest levels (35%) in July-September.
EmploymentRecruitment was steady throughout the period. The number of people employed peaked in July-September and ended the 12 months with a net 18% of companies taking on more staff in April-June 2003 (chart 2).
OrdersOrder books peaked in July-September (53%) and ended the 12 months with a net 48% recording increased orders (chart 3). Firms in the Midlands, large and medium sized companies and those producing 300-700 frames a week as well as trade fabricators, ended the year with the busiest order books.
Taking the 12 months as a whole firms in the Midlands, large fabricators and those producing 300-700 frames a week were ahead of others.
CapacityFabricators working at capacity fell back from 51% in July-September to 46% (October-December) and 43% (January-March). The 12 months ended in a bounce-back with a net 55% working at capacity in April-June 2003 (chart 4).
Selling PricesFabricators increased prices throughout the 12 months. Most increases were recorded in July-September where a net 38% hiked prices. At the end of the 12 months a net 14% of fabricators put up prices in April-June 2003. Higher prices were a sign of confidence through the year, but also an indication of rising costs.
Price expectationsThe number of fabricators expecting to put up their prices remained high and steady through the year with a net 47% at the end of the period expecting to raise prices in the next 12 months.
Small companies, those in the South and firms producing less than 50 frames a week had the strongest intentions. ll companies, those producing less than 50 frames a week, and firms in the South ended the year with the strongest expectations.
Purchase costsThe cost of raw materials continued to rise throughout the year. In July-September a net 51% of fabricators reported increased costs. This eased off slightly to 44% and 39% respectively in October-December and January-March. However, at the end of the year a net 57% of firms recorded higher buying prices.
Investment intentionsInvestment intentions changed through the year. Expectations were highest in July-September 2002 and April-June 2003 (net 30% and 25% respectively). During October-December and January-March expectations eased off slightly (14% and 8%). By the end of the 12 months those with a mix of business had the highest investment spending intentions (chart 6).
Profitability expectationsProfit expectations remained high throughout the 12 months. Fabricators in the Midlands, small companies and those producing more than 300 frames a week had the highest expectations towards the end of the 12 months period.
OutlookConfidence was strong in the 12 months to June 2003 (chart 8). Fabricators in the South were most optimistic in October-December 2002. In the Midlands optimism peaked in January-March 2003 and in the North fabricators were most upbeat in July-September 2002.
Overview“The half year is usually one of those points in the calendar where many take stock of progress or otherwise of the market and their respective companies,” comments Winston Duguid, Managing Director of the UK Commercial Division of Bowater Windows, who sponsor this report. ”The perception is that there are more differences in company performance this year as opposed to recent previous years. Some of this is down to geography but undoubtedly some of it is due to the company, its brand image and positioning and management.
”Overall estimates of PVCu consumption in the first half is of a total British market at best neutral or flat. Whilst a much better performance than the vast majority of Western Europe markets it is nevertheless disappointing. The new build market has shown some growth and PVCu is still growing market share. The public sector has grown, but in terms of frames nearly all growth is in the North of England (from the Trent upwards). It is puzzling why the South of England has been less quick to address what are, according to Government, urgent priorities of meeting the Decent Homes Standard. The recently published English House Survey still shows a backlog of urgent repairs on the housing stock, standing at an incredible £26bn. The number of dwellings failing to provide a decent home (that is unfit, in need of modernisation or providing insufficient thermal comfort) fell from 9.4m homes (46% of stock) in 1996 to 7m (33%) in 2001. The Government is currently committed to eliminate the non-decent homes in the social sector by 2010.
”Finally the retail / trade sector has perhaps seen the biggest discrepancy in company performance. Many companies, large and small, were looking keenly for business between January and April. May, brought about by the Bank Holidays and the increasing British habit of more shorter holidays, has become a slow month but June saw business pick up and this has carried on through to the second half of July. What is becoming clear is that the progress of conservatories remains firm. More and more players are noticing the percentage of their windows going into conservatories, rather than window replacement, is climbing. A ratio of only 20% a few years back is for many increasingly nearer or above 40%.”
The Bowater Windows report is produced for The Blue Book by Michael Rigby Associates, and sponsored by Bowater Windows Ltd in conjunction with Fabrication and Glazing Industries. The aim is to keep a finger on the market pulse, and to monitor fabricators' views and expectations of market movements. Michael Rigby Associates is a management consultancy specialising in fact-based marketing, PR, research and performance improvement for the window and home improvement markets.|
The four Quarterly Trends surveys upon which this annual overview is based each cover a representative sample of 100 window fabricators. For each survey, telephone interviews took place across a balanced spread of size of firm, geographical area and type of fabricator. Numbers employed was used as an indication of company size. The categories are small (1-19 employees), medium (20-49) and large (over 50 employees).
© Michael Rigby Associates 2003 Further information: Mike Rigby, Michael Rigby Associates (01453 521621) www.521621.com