Forum Archive Index - January 2001

["Peter Maiden" <pmaiden@xtra.co.nz>]

For those who follow stocks whose revenues are dependent on building activity in New Zealand (overseas doesn't look too good either)  thought you might be interested in these numbers from Stats NZ.

Last year saw the likes of FLB, STU and CAH report good increases in revenues and earnings - but they did note in their annual reports the future could be clouded by a downturn in building activity.

That growth in building activity and builders merchants has stopped in a big way. How will this impact on these companies prospects this year?

Quarterly data - all %ages as increase (or decrease) over the same period in the same year.

Value of Building Work put in place

Dec99 +15%     Mar00 +39%     June00 +6%      Sep00 -3%

Builders Merchants sales (as part of Wholesale Trade Survey)

Dec99 +18%     Mar00 +12%     June00 -3%      Sep00 +5%

These are sales made by the likes of PlaceMakers and Building Depot (FLB), Carters (CAH) and Benchmark/Hardwarehouse (part of Howard Smith on ASX). Strong growth in sales in the Dec and Mar quarters obviously driven from the amount of building work done up to Mar00.  Only small growth in subsequent 2 quarters

Building Consents Issued

Dec99 +17%     Mar00 -9% Jun00 -24%      Sep00 -33%  (Oct month -25% Nov month -22%)
Total consents for new residential dwelling units for 12 months to Nov00  20,711 compared to 26,146 the previous Nov year. As a lead indicator of future building activity hard to envisage much growth for those dependent on building activity to generate sales in the Dec00 and Mar01 quarters compared to the same quarters in the previous year.

One thing going for builders merchants is that there does appear to be a lot of sales migrating from the traditional hardware stores (such as Mitre 10 etc) to them . Assumption derived from movement in Retail Trade Sales (Hardware stores sector) v's the Builders Merchants data. Over time if more of their business is retail related then margins should improve on these increased sales.

Mike Hudson told us a few months ago that his business was going pretty well - still the same Mike? How have the large price increases you talked about had an impact on business. Can't have been too high by the looks of some of the prices in your latest catalogue?

 

Compiled this for a work related exercise so no bother ( a bit of judicious copy and pasting) to share with those interested in this market background.

Peter

 

Disc - hold none of above mentioned stock but did notice a good rise in FLB today.