The company says it experienced weaker demand before and after the EU referendum but sales gradually improved throughout July.
While the EU vote had created “significant uncertainty” in the outlook for its end markets it said it was still “too early” to precisely make end market predictions. But, crucially, long-term drivers of RMI expenditure, its biggest market area, remain robust and first half pre-tax profits are up 10% to £176m.
There was also an interesting nugget of information in its results. A new branch, opened at Staples Corner in London, is trialling new concepts, including extended in-day opening hours, seven-day opening, and a new counter format maximising its range of products held in store.
Could this be the start of traditional builders’ merchants adjusting their operations to meet the challenge of Screwfix’s rapid growth, all-hours opening and price transparency? Who knows, perhaps all-day Saturday and even Sunday opening for builders merchants may be a possibility in the future.
Meanwhile, latest house-building stats from the NHBC shows there was continued industry confidence in the run-up to the UK’s EU referendum. Private sector new home registrations were up 6% in Q2 to 31,753 compared to a year ago, but the public sector showed a 13% reverse with 9,468 new registrations. The overall number represents a 1% increase for Q2 on a year ago, making it the strongest quarter since 2007. But regionally it was a mixed picture with the South East’s 37% growth in registrations contrasting with a 29% decline in London.
Nordic Q2 mill profits were generally up across the board, but as expected, a hike in the price of imported softwood has occurred, as shippers seek to recoup some of the losses sustained in Sterling’s drop after the EU vote. One of the UK’s major suppliers of Swedish construction softwood says the UK’s decision to leave the UK created “unease and uncertainty” in the short-term, but more difficult to assess long-term.
In our softwood market update, traders have witnessed steady demand and in some cases where shippers have pre-Brexit contracts running and are losing money on their UK exports, the importers have agreed to renegotiate prices in a gesture of good faith.
Of course, there are no hard stats available yet post- Referendum, so it is still too early to precisely determine the impact of the vote, but there is certainly no sign of things falling off a cliff.
