CPA: Construction Product Manufacturers remain positive despite sharp slow down in sales

CPA: Construction Product Manufacturers remain positive despite sharp slow down in sales

CPA: Construction Product Manufacturers remain positive despite sharp slow down in sales

The construction products industry experienced its slowest quarter for sales in over 2 years according to the latest Ernst and Young/Construction Products Association Activity Barometer, published today. The survey records a score of 51, just above the 50 ‘no change’ mark and well down on the 69 recorded in the final quarter of 2007. Sales of heavy side products actually declined in the 3 months and the barometer only remained positive by virtue of reasonably strong sales of lightside products.

Commenting on the results, Dr. Noble Francis, Economics Director for the Construction Products Association said; “The construction industry is not immune to the global economic problems and the general lack of liquidity. Housing has been particularly badly affected with a dramatic slowdown in new housing starts in the first quarter. Overall, however, the construction products industry remains cautiously optimistic in the short term with the majority of firms anticipating modest growth in sales over the next few months.’

‘Looking further ahead, the Association’s latest forecasts for construction output anticipates continued growth in the construction industry over the next few years, helped by high profile schemes such as the Olympics projects and Crossrail’.

Dominic McAra, a Director in Ernst & Young’s Building Products team noted:
“The fall in confidence from its high this time last year is not surprising given the current economic environment. We have seen a number of companies experiencing tougher trading conditions in the last half of 2007 and the first quarter of 2008, compared to more buoyant conditions this time last year.

The immense pricing pressure that is appearing all the way through supply chains is likely to be exacerbating the impact of the general economic conditions on business confidence.

Lower confidence and the credit crunch also appear to have impacted M&A activity in the sector, with fewer of the larger deals occurring. The 5th April Capital Gains Tax changes are still driving activity in the mid-sized and smaller deals, although even for smaller transactions we are seeing companies limiting their acquisitions to high quality assets.”

ENDS

NOTES TO EDITORS:

1. The Construction Products Association represents the UK’s manufacturers and suppliers of construction products, components and fittings. The Association acts as the voice of the construction products sector, representing the industry-wide view of its members. The sector has an annual turnover of £40 billion and accounts for 40% of total construction output. The Association’s membership was surveyed in the final week of September 2006.

2. The Construction Products Association’s Construction Activity Barometer provides an advance indicator of trading conditions and prospects across the construction products industry at the end of each quarter. The Barometer complements the Association’s more detailed Construction Industry Trade Survey, published in conjunction with the Construction Confederation a month after the quarter in question, which provides a detailed assessment of a wide range of market pressures facing the industry; from manufacturers’ cost pressures and capacity utilisation, to the availability of site labour and contractors tender prices.

3. Product definitions: Heavy side products are typically structural materials used early in the construction process and include materials used in transport and other civil engineering projects. Heavy side materials include: aggregates, cement, ready-mix concrete, constructional & reinforcing steel and masonry products. Light side products are typically installed later in the construction process and include internal fittings & services. Light side products include: heating & ventilation systems, plumbing, electrical & lighting, doors & windows, kitchen furniture and thermal.

4. Ernst & Young is one of the leading professional services firms in the UK, providing integrated, financially based solutions to businesses across a wide variety of sectors. Our services fall under three broad headings – Advisory and Assurance Business Services, Tax and Transaction Advisory Services.

The UK firm employs 8,600 people in 21 offices. For the financial year ending June 30 2006 revenues were £1.13bn.

Globally, Ernst & Young member firms operate in 140 countries with more than 114,000 partners and staff. Worldwide revenues for year to 30 June 2006 were US$18.4 billion.

For more information about Ernst & Young contact a member of the UK media team on +44 (0) 20 7951 8837 or visit our website: www.ey.com/global/content.nsf/UK/Media

FOR FURTHER INFORMATION CONTACT:

Simon Storer, External Affairs Director
Construction Products Association
Tel : 020 7323 3770
Fax : 020 7323 0307
E-mail : sstorer@constructionproducts.org.uk

Adam Holden, Director
Ernst & Young
Tel: 0 115 954 2116 (x 54116)
Fax: 0 115 954 2092
Email: dmcara@uk.ey.com