TRAILBLAZERS
RETURN ON CAPITAL: GENTLE LONG-TERM DECLINE 1. MKM
2. JT Atkinson 3. AW Lumb 4. MP Moran
5. MGM Timber 6. Beatsons 7. CRS 8. HPS
9. Beesley & Fildes 10. Grant & Stone 11. James Burrell 12. Browns 13. LBS
14. Chandlers
15.Huws Gray 16.JT Dove
17. John Nicholls
18. James Hargreaves 19.C&W Berry
20. Rembrand Timber
21.Walter Tipper 22. Sydenhams 23. Builder Depot
24. Grafton Merchanting GB 25.RGB
26. Markovitz 27. Lawsons 28. Kellaway
29. Haldane Shiells 30. Williams
31.Covers
32. Joseph Parr
33.Beggs & Partners
34.Myers Building Supplies 35. Elliott Bros 36. EH Smith
37.Wolseley UK 38. Alsford Timber 39. Robert Price 40. Kent Blaxill 41. Crossling 42. Ridgeons
43. AW Champion 44. John A Stephens
45.Parker Building Supplies 46. Frank Key 47. Carver 48. Lords
49. Howarth Timber 50. Jewson
51. Travis Perkins
52. Nicholls & Clarke 53. Bradford & Sons
144.8% 124.1% 12.2% 47.7% 43.4% 40.5% 38.4% 38.1% 30.4% 30.4% 29.0% 27.8% 26.1% 23.6% 21.0% 20.9% 20.0% 19.8% 19.1% 17.9% 17.8% 17.4% 16.1% 15.5% 14.9% 14.7% 14.6% 14.4% 13.5% 13.3% 12.3% 12.2% 11.9% 11.8% 11.3% 11.0% 10.9% 10.7% 10.6% 10.5% 10.4% 9.3% 8.4% 7.4% 6.4% 5.6% 5.2% 4.2% 3.2% 0.1%
-1.0% -7.3%
-48.9%
STOCKTURN GROWTH: NO DISCERNIBLE PATTERN 1. Kent Blaxill
2. Bradford & Sons 3. Beggs & Partners 4. Chandlers
5. Myers Building Supplies 6. Lords
7. James Hargreaves 8. Grant & Stone 9. Carver 10. LBS
11. AW Lumb
12. Howarth Timber
13.Huws Gray 14. Kellaway 15. Markovitz
16. Robert Price 17. Joseph Parr
18. Nicholls & Clarke 19.C&W Berry
20. Travis Perkins 21. Alsford Timber 22. John Nicholls 23. Haldane Shiells
24.Covers
25.MGM Timber 26. EH Smith
27.Wolseley UK 28. Williams 29. Jewson 30.JT Dove
31. Beesley & Fildes
32.MP Moran 33. JT Atkinson 34. Elliott Bros
35. AW Champion
36. Grafton Merchanting GB 37. Frank Key 38.RGB
39. Ridgeons
40. John A Stephens
41.MKM
42. Crossling 43. Browns 44. Lawsons
45.Walter Tipper 46. Builder Depot
47.CRS
39.8% 36.8% 18.0% 15.6% 11.2% 10.3% 10.1% 9.2% 8.1% 7.9% 6.8% 6.8% 6.2% 5.4% 3.6% 2.9% 2.9% 2.2% 2.0% 1.5% 1.0% 0.4% 0.0% 0.0%
-0.3% -0.7% -1.1% -1.4% -1.8% -2.0% -2.1% -2.5% -2.9% -3.2% -4.3% -5.3% -5.6% -6.3% -6.6% -7.0% -7.2% -8.0%
-10.0% -10.4% -12.%
-12.4% -13.1%
48.Parker Building Supplies -13.2% 49. James Burrell 50. Sydenhams 51.HPS
52. Beatsons 53. Rembrand Timber
-14.4% -15.2% -19.2% n/a n/a
April 2020 A supplement to builders merchants journal
NET MARGIN: NEARLY ALL IN THE BLACK 1. Beesley & Fildes 2. Huws Gray 3. C&W Berry 4. JT Atkinson 5. Lawsons
6. Sydenhams 7. Robert Price 8. MP Moran
9. James Hargreaves 10. Grant & Stone
11.Beggs & Partners
12.Walter Tipper 13. AW Lumb
14.MKM 15. LBS 16.HPS
17. Crossling
18.Covers
19.CRS
20. Beatsons 21. Chandlers
22.MGM Timber 23.JT Dove
24. Joseph Parr
25. John A Stephens 26. Haldane Shiells 27.RGB
28.Wolseley UK 29. Elliott Bros 30. Kent Blaxill 31. Williams
32. John Nicholls 33. AW Champion
34. Grafton Merchanting GB 35. Markovitz
36. Alsford Timber 37. Carver
38. Rembrand Timber
39.Myers Building Supplies 40. Browns 41. Ridgeons 42. EH Smith
43. Builder Depot 44. James Burrell 45. Frank Key 46. Kellaway 47. Lords
48.Parker Building Supplies 49. Howarth Timber Supplies 50. Travis Perkins
51. Nicholls & Clarke 52. Bradford & Sons 53. Jewson
LEAGUE TABLES
12.5 11.6 8.3 8.0 7.7 7.5 7.1 7.0 6.7 6.5 6.4 6.3 6.2 6.2 5.8 5.5 5.5 5.4 4.9 4.8 4.6 4.3 4.1 4.1 4.0 3.9 3.8 3.7 3.6 3.3 3.1 2.8 2.8 2.8 2.6 2.6 2.6 2.6 2.5 2.5 2.4 2.1 2.1 2.1 1.5 1.5 0.9 0.6 0.5
-0.7 -4.2 -7.9
-14.5
Return on capital Here’s another table to share with your investors: the one that shows that 50 out of 53 builders merchant companies delivered a return on capital in their latest reporting period. Admittedly some of the returns aren’t great – Jewson’s 0.1% is unlikely to have the Saint Gobain shareholders breaking out the champagne – but 41 out of the 53 are in double digits, and even allowing for some freakishly high returns at the top of the table, the clear message is that investing in a builders merchant is probably a better bet than putting it in a deposit account. But just to see whether we could detect a trend, we ignored the top 10 and the bottom 10 – the outliers – and calculated the average for the middle ground. The result: a satisfying average ROC of 15.7%. But a year ago, it was 16%; a year before that, 16.5%, and a year before that, 18.3%. And that looks worryingly like a trend.
Stockturn growth Kent Blaxill’s position at the top of this table is a result of its decision to dispose of its Global Stone subsidiary; the deal resulted in a small drop in turnover, but the group stock level declined from £7.5m to £5.4m, and stockturn rose from 3.6 to 5.0 times. It was a similar story at Bradfords: it got rid of the Crendon and Snows subsidiaries “which had been such a cash drain in recent years”, in the words of the annual report, and group stock fell from £23.4m to £15.5m, with stockturn rocketing from 5.7 to 7.8 times. Overall, though, the pattern is very inconsistent: 22 of our 53 companies improved their stockturn, with an average gain of 9.5%; two showed no change; 27 saw stockturn slow down, with an average decline of 7%; and the remaining two changed their accounting periods, thus the year-on-year figures are unreliable. In short, it’s difficult to detect anything resembling an overall industry trend.
Net margin
This is another table that’s worth sharing with shareholders, investors and bankers. It shows that 49 out of 53 of the country’s top merchants were net profit earners in their latest financial periods – and as an indicator of the underlying soundness of the builders merchant market, it would be hard to find a more emphatic statement. Most companies recorded relatively modest net margins, but this is an industry which has always operated on modest margins. The merchant’s skill lies in being able to supply exactly what the customer wants, exactly when he wants it, at a competitive price, while still ensuring the business runs at a profit.
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