Roofline Sales Rocketing

Sales, quarter-on-quarter

A net* 32% of roofline stockists and installers reported better sales in August to October 2006 compared with May to July 2006.

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

Mid-sized (40%) and small firms (31%) did better than large companies (13%). Those in the South and Midlands (net 35%) did slightly better than firms in the North.

Both specialist stockists and specialist installers (30%) saw strong growth.

August - October 2006 sales compared with the previous three months by company size

Size	Increase	Decrease	Same	Total	Base
Small	47%	15%	38%	100%	45
Medium	47%	8%	45%	100%	40
Large	33%	20%	47%	100%	15
Total	45%	13%	42%	100%	100

August - October 2006 sales compared with the previous three months by region

Region	Increase	Decrease	Same	Total	Base
South	43%	8%	49%	100%	37
Midlands	47%	12%	41%	100%	32
North	45%	19%	36%	100%	31
Total	45%	13%	42%	100%	100

Sales, year-on-year

A net 35% of stockists and installers increased sales in August to October 2006 compared with the same three months of 2005 (chart 1). Mid-sized (48%) and small companies (38%) saw an improvement but on balance 7% of large companies saw a fall in sales. Stockists and installers in all regions experienced better sales.

Specialist stockists (net 44%) again did better than specialist installers (25%).

Sales forecasts

Seasonal influences mean that expectations for the next three months are low. On balance 41% of stockists and installers expect to see a drop in sales over the next three months (November 2006 to January 2007) compared with the previous three months (August to October 2006) - see chart 2.

Small companies (net 60%) are most negative but large (33%) and mid-sized firms (23%) also have low expectations. Firms across the country anticipate a fall in sales.

Slightly more specialist installers (net 54%) see a turn down than specialist stockists (42%).

Year-on-year forecasts are better. A net 11% of stockists and installers expect increased sales in Novemeber 2006 to January 2007 compared with Novemebr 2005 to January 2006 (chart 3). Mid-sized firms (net 20%) are most confident but small companies (9%) are also positive. However, a net 7% of large firms forecast a drop. Stockists and installers in the South and Midlands (17%) are upbeat but a balance of 3% in the North expect sales to drop.

While specialist stockists (net 13%) expect a rise in sales, a balance of 8% of specialist installers anticipate a fall in sales over the period.

"Our installer customers want to expand and diversify. They realise they can maximise on their customer needs and create more revenue for themselves by being involved in a wider variety of products. That is where roofline comes into play. We are seeing more and more of our own customers who we know to be window installers buying roofline products. They now know that there is no need to pass on this work to another company, they can do the roofline within their own business and are reaping the profits because of it." Mr Mark Warren, Managing Director Lister Trade Frames Ltd, Stoke-on-Trent

Profits

A balance of 42% of stockists and installers expect better profits over the next 12 months compared with the previous 12 (chart 4). Mid-sized firms (net 64%) are most confident but large and small (27%) are also bullish. By region, those in the Midlands (53%) and South (43%) are more upbeat than firms in the North (28%).

Both specialist stockists and specialist installers (net 36%) are confident of increased profits.

Employment

A abalnce of 13% of roofline stockists and isntallers took on more staff compared with three months ago.

Capacity

A net 59% of roofline stockists and installers interviewed said they were working at capacity (chart 5).

Buying Prices

On balance 54% of stockists and installers reported an increase in purchase costs of materials compared with three months ago (chart 6). Firms of all size and in all regions were affected with none of those interviewed reporting a drop in price.

More specialist installers (net 67%) reported rising costs than specialist stockists (55%).

Selling Prices

Rising costs meant that a net 26% of companies also put up their selling prices compared with three months ago (chart 6). More mid-sized firms (net 35%) raised prices than small (22%) or large companies (13%). More firms in the Midlands (34%) increased prices than any other region.

Specialist stockists (33%) increased prices along with 13% of specialist installers.

A balance of 79% of stockists and installers also expect to have to raise selling prices over the next 12 months compared with the previous 12 months (chart 7). Esxpectations are strong across firms of all sizes and in all regions (net 79%) with very few expecting to cut back. Both specialist stockists (net 82%) and specialist installers (75%) expect to increase prices.

Stock levels

A balance of 18% of stockists and installers reported higher stocks than three months ago.

"Busy lifestyles means "low maintenance" or "no maintenance" are the buzzwords for consumers today. Homeowners are generally aware of what can be done to the exterior of their homes to reduce the need for maintenance; windows tend to be replaced first and then people consider roofline. "There is still a great deal of potential work in our area, however installation companies must maintain standards and price competitively to win the business." Mr Graham Tuffey, Partner Anchor Cladding Services, Rainham

Investment Intentions

A balance of just under a quarter of stockists and installers expect to increase their investment on buildings and equipment over the next 12 months compared with the previous 12 months. Both specialist installers (net 33%) and specialist stockists (24%) expect to up their spending.

Prospects

A net 19% of stockists and installers are more optimistic now about the overall prospects for the roofline market than three months ago. Mid-sized firms (38%) are more confident than small companies (13%) but a balance of 13% of large firms are less confident than three months ago. Stockists and installers across the country are positive.

Specialist stockists (20%) are more optimistic than specialist installers (8%).

Problems

Price cutting in the market (54%), margin squeeze and supplier price rises (51%) were the main problems facing stockists and installers this quarter. However, price cutting was the single biggest problem mentioned by 17% of those interviewed (chart 8).

The Internet

Sixty-five percent of respondents use the internet regularly i.e. daily or weekly (chart 9) and 29% use it to place orders with suppliers.

Although 69% of firms interviewed have a website, just 19% say they offer the option for customers to order online in some way or another.

Overview

"The world economy is still powering on, despite further signs that the US economy is slowing." says Mike Rigby, whose company Michale Rigby Associates produced this report. "The drop in US house prices is the steepest since 1970 and the stock of unsold new houses is feeding back up the supply chain, will it trigger a collapse or simply take the froth off consumer confidence and the economy? At this point a soft landing looks more likely.

"The European economy is a lot more lively than we're used to, but although Germany is recovering its confidence and dynamism, most of the explanation can be found in the East where new EU members are growing strongly.

"In the UK, September's inflation was 3.6%, the highest since 1998. Higher energy prices and higher mortgage rates are squeezing consumers' disposable income. So far the effects on home improvement spending by the bounce back in house prices, and consumer confidence have yet to feed through in significantly improved demand.

"House prices rose again in September as increasing numbers of home buyers chased a dwindling supply of properties. Rising house prices and the rising cost of moveing though has deterred mobility and encouraged homeowners to live in their properties for longer. During the 1980's homeowners moved home once every seven years on average. Now it's more than twice that. This means more home improvements are being carried out, which can only be good news for the roofline market."

Comment

"With homeowners staying in their existing homes for longer," says Tony Walsh, Managing Direcotr of Freefoam, who sponsor this survey. "Window and conservatory companies will reap the benefits this brings when consumers start to make big improvements. However, they are not the only ones who gain. With more installers now switched on to the benefits of roofline, more homeowners are also having roofline products installed.

"Consumers are prepared to spend money on their home but they will not be knocking down your door to buy from you. Projects don't just fall in your lap. There is no substitute for positive word of mouth generated by quality of installation and service, but the real winners also make themselves know to prospective purchasers. Whatever the state of the market, proactive marketers and sellers do better than those who sit and wait. Are you consistent in your marketing? Is your company top of mind, the first name to be considered when your sort of customers think of roofline? If homeowners know about you, they're more likely to use you.

"Homeowners do have money, and they are spending, but you are competing for their pounds with holidays, cars and entertaining as well as a growing list of other home improvements. Companies have to make the case for their company. The long term prospects for roofline look very good."

The Freefoam Roofline Report, a quarterly trends survey, is produced by Michael Rigby Associates, and sponsored by Freefoam Plastics Ltd. The survey covers a representative sample of 100 roofline installers and stockists of PVC-UE cellular foam. Telephone interviews took place between the 1st and 8th November 2006 across a balanced spread of size of firm and geographical area. Numbers employed was used as an indication of company size. The categories are small (1-4 employees), medium (5-19) and large (over 20 employees). For survey details call Lucia Di Stazio on (01453) 521621 © Copyright Michael Rigby Associates 2006