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LEAGUE TABLES NET MARGIN


This is the table to share with your bank manager, with your shareholders, and with potential investors: the one that shows that in their latest accounts, 45 of the UK’s top 52 builders merchants recorded a net profit. Yes, margins are under pressure, and there seems little reason to believe that this is likely to change; but the fact remains that building materials distribution is a consistently profitable business. Again, the longer-term trend is clear. In 2017, 47 of 48 Trail Blazers recorded a net profit, and average net profit among those 47 companies was 5.32%. In 2018, it was 50 companies out of 50, and the average slipped to 4.75%. A year later in 2019, 48 of 51 companies recorded a net profit, and their average rose marginally, to 4.89%. In 2020, it was 49 of 53, with an average of 4.49%; and in this year’s survey, 45 of 52 companies were profitable at pre-tax level, with an average net profit of 3.77%. Margins are indeed under pressure, but merchants continue to run their businesses profitably. Bottom line: the overwhelming majority of companies in the builders merchant industry manage to make money – year after year after year.


NET MARGIN: STAYING PROFITABLE 1. C&W Berry 2. Lawsons 3. Huws Gray 4. JT Atkinson 5. MP Moran 6. AW Lumb


7. James Hargreaves 8. Walter Tipper 9. Sydenhams 10.Wolseley UK 11. Boys & Boden


12. Robert Price & Sons 13.MKM


14. Carver 15. LBS


RETURN ON CAPITAL


The merchants covered in this year’s Trailblazers achieved an average return on capital of 14.6% – which in an age of near-zero interest rates represents a pretty healthy investment.


As is so often the case, however, things aren’t what they used to be. Go back to 2017, and the Trailblazers’ average ROC was 27.9% – another indication of the way in which margins and profitability are being squeezed.


There is always a risk involved in calculating averages like this, however: the danger that the average figure may be artificially inflated or deflated by the outliers at the top and bottom of the table, recording unusually high or low ROC figures like Atkinson’s 98.2% this year. If we exclude the top five and the bottom five, this year’s average ROC comes out at 12.5%, compared to 2017’s comparable 19.5% – still a reduction, but not on as dramatic a scale as 14.6% compared to 27.9%.


Overall, though, the builders merchant market still looks to be worth investing in. Not only was the Trailblazers’ average ROC close to 15%, more than half of the 52 companies covered by this year’s survey achieved a double-digit return. That’s a fact worth sharing with your bankers, with your shareholders, and with your potential investors.


16.Covers 17.JT Dove


18.MGM Timber 19. Crossling


20. John A Stephens 21. Joseph Parr


22.Myers Building Supplies 23.RGB


24. Haldane Shiells 25.CRS


26. Turnbull


27. Grant & Stone 28. Markovitz 29. Elliott Bros


30. AW Champion 31. Frank Key 32. Kellaway


33. Builder Depot 34. Alsford Timber 35. Bradford & Sons 36. James Burrell 37. Browns


38. John Nicholls


39. Grafton Merchanting GB 40. National Timber Group 41. EH Smith


42.Beggs & Partners 43. Williams


44. Beesley & Fildes 45. Kent Blaxill


46. Howarth Timber 47. Beatsons


48. Travis Perkins 49. Jewson


BMJ LEAGUE TABLES SPONSORED BY


8.6% 7.9% 7.2% 7.1% 6.9% 6.5% 6.3% 6.1% 6.0% 5.7% 5.7% 5.6% 5.5% 4.9% 4.9% 4.6% 4.5% 4.3% 4.1% 4.1% 3.9% 3.8% 3.7% 3.7% 3.2% 3.0% 3.0% 2.9% 2.8% 2.7% 2.6% 2.2% 2.1% 2.0% 2.0% 1.8% 1.8% 1.7% 1.7% 1.5% 1.4% 1.3% 0.8% 0.8% 0.4% 0.3% 0.2% 0.0%


-0.0%


50.Parker Building Supplies -0.5% 51. Lords


52. Nicholls & Clarke 53. UK Plumbing Supplies 8


-1.6% -2.6% -3.6%


TRAILBLAZERS


RETURN ON CAPITAL: DOWN BUT NOT OUT 1. JT Atkinson 2. MKM


3. MGM Timber 4. AW Lumb 5. MP Moran 6. Turnbull 7. CRS


8. James Burrell


9. Myers Building Supplies 10.J T Dove 11. Kellaway 12.Huws Gray 13. Browns 14. LBS


15.C&W Berry 16.Wolseley UK


17. James Hargreaves 18. Sydenhams 19. Markovitz


20.Walter Tipper 21. Builder Depot 22. Boys & Boden 23. Bradford & Sons 24. Grant & Stone 25.RGB


26. Haldane Shiells 27. Lawsons


28. John Nicholls 29. Joseph Parr 30.Covers 31. Carver


32. Frank Key 33. Elliott Bros


34. Robert Price & Sons 35. Crossling


36. AW Champion 37. Alsford Timber 38. John A Stephens


39. Grafton Merchanting GB 40. EH Smith 41. Williams


42. Travis Perkins 43. Beesley & Fildes 44.Beggs & Partners 45. Howarth Timber & Build 46. Beatsons


47. Kent Blaxill 48. Jewson


49. Nicholls & Clarke 50. Lords


98.2% 67.1% 43.4% 41.9% 33.8% 31.4% 24.8% 24.4% 24.0% 22.1% 20.0% 19.3% 18.6% 18.6% 18.5% 17.1% 16.7% 16.2% 15.7% 15.7% 14.3% 13.9% 13.5% 13.2% 12.8% 12.2% 12.1% 11.9% 11.1% 9.7% 9.5% 8.9% 8.7% 7.9% 7.6% 7.6% 7.3% 7.3% 7.1% 6.1% 3.7% 2.8% 2.2% 2.2% 1.8% 1.4% 1.0%


-0.6% -3.0%


-10.0%


51.Parker Building Supplies -13.0% 52. UK Plumbing Supplies 53. National Timber Group


-22.2% n/a


A supplement to builders merchants journal April 2021


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