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The Freefoam Roofline Report
Roofline up on 2004 and more Growth Forecast
Sales, quarter-on-quarter
A net* 20% of specialist roofline stockists and installers saw sales increase in the last three months (May to July) compared with the previous three months (February to April). Small firms report the most widespread growth (32%) followed by mid-sized and large companies (15% and 5% respectively).The Midlands did best (net 43% of firms recorded growth) compared with the North (16%) and South (8%).
| * The net balance is the difference between the percentage of companies reporting an increase over those reporting a decrease. |
A balance of 28% of specialist stockists sold more over the last three months compared with 10% of specialist roofline installers.
May - July 2005 sales compared with the previous three months by size
| Size | Increase | Decrease | Same | Total | Base |
| Small | 46% | 15% | 39% | 100% | 41 |
| Medium | 35% | 20% | 45% | 100% | 40 |
| Large | 32% | 26% | 42% | 100% | 19 |
| Total | 39% | 19% | 42% | 100% | 100 |
May - July 2005 sales compared with the previous three months by region
| Region | Increase | Decrease | Same | Total | Base |
| South | 27% | 20% | 53% | 100% | 40 |
| Midlands | 53% | 11% | 36% | 100% | 28 |
| North | 41% | 25% | 34% | 100% | 32 |
| Total | 39% | 19% | 42% | 100% | 100 |
Sales, year-on-year
A balance of 8% of stockists and installers sold more roofline in May to July 2005 compared with the same period in 2004 (chart 1). More small (10%) and large firms (11%) reported growth than mid-sized companies (5%). Stockists and installers in both the North and Midlands (22%) did better, but firms in the South saw sales drop (13%).A balance of 24% of stockists sold more but specialist installers (net 14%) installed less over the period.
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"I estimate two in ten houses in our area have had roofline replaced. This quarter we have seen our sales of roofline products increase 20% compared with the same period last year, with roofline sales now accounting for 25% of our overall business. "We see the market diversifying towards mahogany and light oak effect roofline as more people chose wood effect windows particularly in older properties to replace timber ones. Sixty percent of our sales are white, compared with 20% mahogany and 20% light oak."
Mr Geoff Brown, Technical Director |
Sales forecasts
A net 40% of stockists and installers expect sales to grow in the next three months (August to October) compared with the previous three months (chart 2). Expectations are similar in companies of all sizes and in all regions except for the Midlands which is more cautious (21%). Specialist stockists (45%) are more bullish than specialist installers (19%).
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"There is at least 60% of housing in our area to target for replacement roofline. "The key to successful sales is product knowledge and diversification through consumer demand; we give our salesmen scope to offer alternatives to white roofline with colours and wood effects, which are becoming more popular throughout the window and roofline market, and we like to offer our customers a choice."
Mr Steve Crabtree, Warehouse Manager |
A balance of just under three in ten stockists and installers expect to sell more in August to October 2005 compared with the same quarter last year (chart 3). Mid-sized firms (40%) and companies in the North (44%) are most positive. More Stockists (41%) expect growth than installers (29%).
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"I estimate 50% of housing in our area have had their roofline replaced. "There is a definite market trend towards wood effect cellular foam products, our split is 60% white, 20% mahogany and 20% light oak and we estimate an increase in sales this year of 20%+ on last year."
Mr Luke Ruderham, Manager |
Profits
A net 47% of stockists and installers anticipate better profits in the next 12 months compared with the previous twelve (chart 4). Companies of all sizes and in all regions have strong profit expectations.
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"We are seeing significant growth in trade sales of PVC-UE roofline, where timber would have been preferred, as builders recognise the benefits of maintenance free products and ten year guarantees.
"We are finding an upward trend towards sales of wood effect roofline as consumers are made more aware of choice by local advertising and fliers. Our sales of rosewood and light oak roofline have increased to 30%."
Mr Nick Stratford, Director |
Employment
A net 8% of stockists and installers took on more people compared with three months ago. Mid-sized companies (15%) and firms in the North (25%) were most active. Large companies and businesses in the South (5%) cut back on staff.|
"Approximately 50% of houses in Leicester have had their fascia and soffits replaced.
"75% of our roofline installations has been for social housing. I feel there is plenty of scope for this industry and a continuing market need for roofline replacements."
Mr John Aires, Managing Director |
Capacity
Fifty-one per cent of stockists and installers are currently working below capacity (chart 5).
Buying Prices
A balance of just under one in two stockists and installers reported rising costs compared with three months ago (chart 6). Mid-sized firms (61%) and those in the Midlands (54%) were hardest hit.
Selling Prices
A net 4% of businesses put up their prices compared with 3 months ago (chart 6). More mid-sized (13%) and large firms (5%) raised prices compared with 5% of small companies, who cut prices. Stockists and installers in the South (15%) and North (3%) increased prices but those in the Midlands cut back (11%).A net 43% of companies expect to put up their prices in the next 12 months compared with the last 12 months (chart 7). Few expect to drop prices.
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"There is a huge market for stockists and installers of Cellular foam products and for those who are willing to work hard at educating their customers and training them on how to market the product effectively. This way the retail customer realises the potential, benefit and added value in replacing their roofline.
"The PVC-UE market is virtually untapped with approximately 80% of dwellings still to target, and with consolidation of the systems companies it's the smarter, more forward thinking companies who will benefit."
Mark Simm, Sales Director |
Stock levels
A net 24% of stockists and installers built up stocks compared with three months ago.
Investment intentions
A balance of 34% of companies expect to spend more on equipment and buildings in the next 12 months compared with the previous 12 months. More large firms (58%) are likely to invest than small (33%) or mid-sized companies (23%).
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"Approximately 80% of housing in our area still need their fascia and soffits replacing, which potentially means a large market for replacements. And with the consolidation of PVCu systems companies this should see increased profitability for cellular foam products.
"With interest rates holding and consumer confidence growing, I estimate our company sales will increase by 4% by the end of the year."
Mr Ray Kirkby, Managing Director |
Prospects
A balance of just under one in ten stockists and installers are more confident now about the overall prospects for the roofline market than three months ago. Mid-sized firms (13%) and companies in the South (15%) are most positive. Specialist stockists (16%) are more optimistic than installers (5%).
Problems
Price cutting (62%), margin squeeze (60%) and low sales volume (53%) were the main problems facing stockists and installers in the last three months. Of these, the single biggest problem was price cutting in the market reported by 20% of stockists and installers (chart 8).
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"Approximately four in ten houses have had their roofline replaced in Aberdeen. "We find more and more people changing from timber to PVC-UE roofline in both the refurbishment and building sectors because of the low maintenance aspect. We sell approximately £4,000 worth of roofline and associated products per day and anticipate to see a 15% increase in sales over the next year."
Mr Mark Grant, Branch Manager |
Overview
"While major 'new' economies such as China and India are doing well and growing fast, Europe is struggling," says Mike Rigby, whose company Michael Rigby Associates produced this report. "In the UK, growth has been slow over the last 12 months as consumer confidence dipped and businesses reported poor sales and low productivity. The Bank of England's recent 0.25% cut in interest rates, to 4.5%, should halt the slide. There will be more cuts before the year end but economists believe it will take more than interest rate cuts to revive consumer confidence and strengthen the economy. The threat of further rises in raw material costs and increases in oil prices won't help, as both businesses and consumers will feel the squeeze. Recent terrorist attacks and threats of more to come is not good news for London or the South East."But house prices have stabilised and manufacturing, although technically in recession, showed signs of life with an increase in output in the second quarter of 2005. Consumers can still be tempted to spend even in difficult times. It may take more effort to overcome their caution, but if businesses remain focused on consumer needs and continue to market their products effectively then consumers will be persuaded."
Comment
"There are ways to grow," comments Tony Walsh, Managing Director of leading roofline company Freefoam Plastics who sponsor this survey, "organically, by your own efforts, or by acquisition, where you buy others' growth. Acquisition is often seen as exciting and quicker, but it is also more likely to fail. In fact most acquisitions do fail or give the buyer acute indigestion. A number of groups went on an acquisition binge in the 1990's and have been closing or spitting out the brands they bought, one by one, since then as losses mount and they threaten the finances of the parent group. We are currently in the midst of a number of such Fire sales. With raw material price rises threatening to rise again, oil going through the roof and power costs predicted to follow, only those with a full understanding of their businesses from costs to customer will survive."While window companies look gloomily at the shrinking number of windows left to replace, installers can see that more than eight out of ten houses still need roofline. Costs may rise and consumer confidence could be stronger, but the market is young and the prospects strong!"
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The Freefoam Roofline Report, a quarterly trends survey, is produced by Michael Rigby Associates, and sponsored by Freefoam Plastics Ltd in conjunction with Vision Publications. The aim is to keep a finger on the roofline market pulse, and to view installers' and stockists' expectations of market movements.
Freefoam Plastics Ltd is a leading manufacturer of high quality cellular foam PVC-UE building products. Michael Rigby Associates specialises in fact based marketing in home improvements, DIY and building materials markets. 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 5th August 2005 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). © Copyright Michael Rigby Associates 2005 Full report available free: call Lucia Di Stazio on (01453) 521621 |
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