PRESS RELEASE BY MBD...

UK BUILDING PROUCTS MARKET RESEARCH REPORT

RELEASED: NOVEMBER 2007

After researching the UK building products market development and taking into account various other factors the following conclusions can be drawn from MBD's report:

The building products market covers the following categories: architectural ironmongery, bathroom equipment, bricks, central heating, ceramic tiles, commercial heating equipment, concrete & concrete products, conservatories, domestic central heating, doors, rainwater products, roofing materials, thermal insulation, timber, toiletware, tubes & pipes, and windows.

MARKET REVIEW 2003-2007:

Partial year data indicates a 6% increase to take the value of the bricks market to £520.6 million at MSP in 2007, reversing the downward trend evident in recent years. Indeed, prior to this, demand for bricks declined by 4% and a modest 1% in 2005 and 2006 respectively. Nonetheless, total sales of bricks are anticipated to increase by a nominal 1% between 2003 and the current year.

Demand for concrete and concrete products is projected to increase by 6% to a review period high of £5195.0 million in 2007. Prior to that sales increased in each year between 2003 and 2006, culminating in nominal growth of 16%. UK demand for concrete and concrete products has been driven by a buoyant construction market during recent years. However, the value development also reflects price increases rather than just a strong increase in volume demand. Price increases above the prevailing inflation rate have been caused by rising costs for manufacturers in a number of sectors.

In 2007, the UK market for roofing material coverings is anticipated to increase by 7% to 141 million m², consolidating the trend for growth evident prior to that. Indeed, overall growth of 25% is projected between 2003 and 2007. Demand for roof coverings has benefited from a relatively buoyant construction market as well as from strong levels of repair & maintenance activity, which has been a main market driver. However a stronger market development is believed to have been hindered by the rising share commanded by flats and apartments in the residential construction sector.

Demand for building thermal insulation has increased strongly over the five year review period up to 2007, with annual growth levels exceeding 10% during most years, except for a more moderate 8% increase recorded in 2005. This was followed by growth of 11% in 2006, with a 10% increase expected to take the value of the market to £849.9 million by the end of the current year. Building thermal insulation has proved to be the most buoyant of the two thermal insulation market sectors reflecting the continued upturn in new construction activity, tighter thermal insulation standards set out in the building regulations and particularly the government’s EEC programme which was introduced during 2002.

In the current year, MBD believe that an increase of 9% will take the value of the timber and semi-finished timber products market to £3485.7 million at manufacturer’s selling price consolidating the 5% growth recorded in the previous year. However, prior to that sales declined by 2% and 1% in 2004 and 2005 respectively to a period low of £3055.9 million in the latter year. The strong growth in 2006 and 2007 is believed to be a partial reflection of price increases, while growth in volume terms is expected to be more subdued.

MARKET FORECAST 2008-2012:

The UK brick market is anticipated to demonstrate real term value growth throughout the forecast period, with annual levels oscillating between 2% and 3%. The value of the market is projected to increase by a cumulative 13% in real terms between 2007 and 2012, reaching £590.8 million (at 2007 prices) in the latter year.

The UK market for concrete and concrete products is forecast to increase in real terms throughout the five year period up to 2012. Overall sales are expected to increase by 13% in real terms between the current year and 2012 Annual growth rates are projected to fluctuate between 1% and 3%. In 2012 real term growth of 3% is expected to take the value of the market to £5881.9 million at 2007 prices. Demand fort concrete and concrete products is expected to be driven by a continued positive development in UK construction output.

The UK roofing material coverings market is projected to increase year-on-year during the forecast period, reflecting anticipated growth in construction and repair & maintenance activity. Annual growth levels are projected to fluctuate between 5% and 7%. Volume sales of roofing material coverings are forecast to increase by 36% between 2007 and 2012, reaching 191.9 million m² in the latter year. Growth in the residential sector is expected to be hindered by the continued trend away from large detached and semi-detached houses and towards flats, terraces and three storey mews type developments, which reduces the average roof size per unit built.

All sectors of the building thermal insulation market are expected to demonstrate growth in real terms throughout the five year forecast period, with most sectors developing in line with the overall market. Cavity wall and loft insulation are expected to gain market share due to further strong demand to be generated by the Cert 2008-11 programme. Indeed, the share commanded by cavity wall insulation is forecast to increase from 20% in 2007 to 24% in 2012, while the proportion of the market commanded by loft insulation is forecast to increase from 21% to 23% during the same period. Other sectors that are expected to further benefit from the EEC programme, albeit to a lesser extent than cavity wall and loft insulation, include draught proofing and internal wall insulation. Further schemes that are likely to generate demand for thermal insulation include the Code for Sustainable Homes and the implementation of Home Information Packs, although the magnitude of demand generated by these programmes remains highly speculative.

MBD project moderate year on year increases during the five year forecast period ending 2012. Annual growth rates are anticipated to oscillate between 1% and 2% in real terms culminating in an overall increase of 7%. Sales of timber and semi-finished timber products are expected to reach £3720.2 million at 2007 prices in 2012. Overall, market development is expected to be partly driven by increased demand from the construction industry, as timber frame building is anticipated to gain further market share. This is supported by changes in building regulations and government plans to make new homes zero carbon rated, which favours the use of timber due to the material’s superior thermal insulation properties. Prices of timber are unlikely to fall significantly from existing levels, with further price increases expected in some sectors, at least in the short-term.

NOTE TO EDITORS:

Market & Business Development Ltd specialises in business to business market research. The range of reports and industries in which we operate in constantly expanding (our portfolio comprises of more that 140 titles). All our reports are written by in-house market consultants.

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