Sales – quarter-on-quarter

The first quarter shows a positive start for 2007. A balance^* of 37% of window fabricators (the difference between 52% who sold more windows and doors and 15% who sold less) sold more windows and doors in the last three months (January to March 2007) compared with the previous three months (October to December 2006) - Chart 1.

Large firms (net 58%) did best but mid-sized (46%) and small fabricators (23%) also saw an improvement. Fabricators across the country reported growth.

More trade and retail fabricators (net 43%) increased sales than commercial firms (28%).

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

January – March 2007 sales compared with the previous three months – by size

SIZE	Increase	Decrease	Same	Total	Base
Small	44%	21%	35%	100%	52
Medium	54%	8%	38%	100%	24
Large	67%	8%	25%	100%	24
Total	52%	15%	33%	100%	100

January – March 2007 sales compared with the previous three months – by area

AREA	Increase	Decrease	Same	Total	Base
South	58%	15%	27%	100%	34
Midlands	48%	16%	36%	100%	31
North	49%	14%	37%	100%	35
Total	52%	15%	33%	100%	100

Sales – year-on-year

Sales also improved compared with the same period last year. A net 36% of companies sold more windows and doors in January to March 2007 compared with the same three months of 2006 (Chart 2). Large firms (net 46%) did better than small and mid-sized firms (33%). Fabricators across the country reported growth.

Retail fabricators (net 44%) and trade firms (35%) did significantly better than commercial companies (6%).

Stocks

Overall, a net 7% of fabricators increased stock levels compared with three months ago.

Employment

A balance of 10% of fabricators took on more staff compared with three months ago (Chart 3). More large companies (net 25%) took on staff than mid-sized (13%) or small firms (2%). Firms in the Midlands (net 16%) were most active at recruiting compared with 9% of fabricators in the North and 6% in the South.

Orders

Orders are up with a net 45% of firms reporting fuller books compared with three months ago (Chart 4). More large (net 54%) and mid-sized firms (50%) increased orders than small companies (38%). Fabricators in the North (net 57%) were ahead of firms in the Midlands (42%) and South (35%).

Capacity

Forty-five per cent of fabricators now say they are working at capacity (Chart 5).

Raw materials

A net 73% of fabricators reported a rise in purchase costs of materials compared with three months ago (Chart 6).

Prices

A balance of 8% of fabricators reported an increase in selling prices compared with three months ago (Chart 6). Mid-sized firms (net 29%), fabricators in the North (20%) and retail companies (20%) were most active in raising prices. A balance of 8% of large firms and 5% of trade fabricators reported a drop in prices.

Price expectations

A net 24% of fabricators expect to put up prices over the next 12 months compared with the previous 12 months. This is mirrored across companies of all sizes and in all regions.

Investment intentions

On balance 27% of fabricators expect to increase spending on new plant and machinery over the next 12 months compared with the previous 12 months (Chart 7).

Outlook

A net 53% of fabricators forecast an increase in sales in April to June 2007 compared with January to March 2007. Large and mid-sized firms (net 65%) are more positive than small fabricators (42%). More firms in the South and Midlands (net 57%) anticipate growth than those in the North (46%). Commercial and trade fabricators (net 72% and 60% respectively) are most upbeat but retail companies (43%) also expect growth.

A balance of 49% of fabricators also expect to sell more windows and doors in the next three months compared with the same three months of 2006 (Chart 8). Fabricators of all sizes and in all regions forecast better sales. Commercial fabricators (net 67%) are more positive for higher sales than trade (50%) or retail companies (39%).

Prospects

On balance, 16% of fabricators are more confident now about the overall prospects for the window industry compared with three months ago (Chart 9).

Mid-sized fabricators (net 42%) are significantly more optimistic than large (17%) and small firms (4%). Fabricators in the North (net 29%) are more confident than those in the Midlands and South (10%). Commercial (net 28%) and trade fabricators (25%) are significantly more optimistic about the overall prospects for the window industry than retail firms (2%).

Profitability

With rises in sales, prices and expectations, it is not surprising that a net 40% of fabricators expect profits to also increase over the next 12 months compared with the previous 12 months.

Expectations are strong across the country and among firms of all sizes and type.

Problems

The main problems facing fabricators in the last three months were supplier price rises (67%), margin squeeze (63%) and price cutting in the market (62%).

The single biggest problem for fabricators over the last three months was supplier price rises, mentioned by 22% of respondents.

Comment

“The survey confirms anecdotal information that the first quarter of 2007 was better than expected for many fabricators in the trade/retail market. Why was this so? There are four reasons being quoted.” Comments Winston Duguid, Managing Director of WHS Halo, who sponsor this report. “First, expectations were low following the relatively poor first three months of 2006, secondly that demand, based on continuing good housing transactions, was stronger than anticipated, thirdly that local/regional fabricators have taken a little bit of market share from the super fabricators (for various reasons) and last but not least, because approximately fifty to seventy smaller fabricators have closed their fabrication doors and decided to exit altogether or buy their frames from other fabricators.”

“There are some reasons to be cautious about the second half of 2007. The Bank of England’s interest rates policy is designed to slow parts of the economy, particularly the housing market. Transactions are already slowing in many parts of the country and the introduction of the HIPS scheme will add more to the cost of moving unless Estate Agents’ absorb it. Conversely we can expect the local/regional fabricators to carry on regaining some market share as they invest in their businesses to make themselves more efficient and as some installers prefer site deliveries. This will quicken the exiting of the very small players from fabrication helping to boost off- take from those that remain.”

“The public sector should see a better performance into the second half of 2007 as the monies held back from 2006 are released over the treasury’s 2007 to 2009 Comprehensive Spending Review and new house building should not be affected in the short term, particularly houses as opposed to apartments.”