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The level of UK economic activity, in particular the state of the repair, maintenance and improvement (RMI) and new build housing markets, are important drivers of our performance.

 Revenue by Market

 Market Drivers

PRIVATE HOME IMPROVEMENT (RMI)plus

The RMI market is broadly flat at the moment, caused by uncertainty over house prices and relatively weak growth in real wages.

Private home owners typically invest in PVC products to improve the appearance and energy efficiency of their property. Spend is often significant, so the state of the economy and the resulting impact on the housing market and consumer confidence influences demand.

Home sellers and buyers often look to improve their property just before or just after a transaction. Alternatively, when housing markets are weak, homeowners might choose to improve or extend their existing property, rather than move house. In addition, planned improvements to retirement housing and increased availability of funds following changes to pension scheme rules may provide support to the RMI market in the future.

PRIVATE NEW BUILD HOUSINGplus

New build growth has been strong in recent years and the large house builderscontinue to report good performance. Small improvements in housing construction and starts are currently forecast for 2017 and 2018. However, uncertainty over the macro-economic environment suggests affordability will likely remain a key issue.

There is still a significant gap between the government’s target for new dwellings per annum and the current level of private new build homes. The Help to Buy scheme supports demand. With the housing shortage continuing to be an important political topic, on-going positive government intervention remains a possibility.

 

SOCIAL HOUSING IMPROVEMENTplus

2017 will see the end of the Decent Homes Programme and the Energy Company Obligation (ECO) scheme. The Decent Homes Programme requires properties owned and managed by councils and housing associations to meet the Decent Homes standard, thereby improving the energy efficiency of social housing. The ECO scheme requires energy companies to provide support for the introduction of energy efficient measures into houses occupied by vulnerable or low-income people.

Under both schemes, support typically comes in the form of heating packages, insulation and energy efficient windows.

PUBLIC NEW BUILD HOUSINGplus

With government policy targeted towards increasing private sector affordable housing rather than public sector social housing, this sector represents a very small proportion of the UK housing market.

The Right to Buy scheme helps eligible council and housing association tenants buy their homes at a discount. As such, the scheme is expected to result in reduced public sector housing stock.

Housing associations have relied on market sales to raise capital to fund rental property development. Weaker house price growth and fewer transactions will likely hamper this. In addition, rent caps may reduce the financing available for new developments.

MARKETS FOR EUROCELL PRODUCTSplus

On average, markets for the product groups specific to Eurocell are also currently expected to be flat over the next two years.

Roofline (Tonnes) Window Profile (Tonnes)

 

SUMMARY

Whilst external market signals are difficult to read at the moment, we are confident that our strategic initiatives (described in Our Strategy), including increasing market share and continued expansion of the branch network, will deliver good growth for Eurocell in the markets in which we operate.

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