The latest forecast for the construction sector is a difficult read for those with shares in building merchants. The Construction Products Association has downgraded its outlook for the coming year from flattish growth to a 2.1 per cent decline. It expects the sector to be weighed down by shrinking housebuilding and home repair, maintenance and improvement (RMI) markets, both of which are predicted to contract by 4 per cent.
- Robust track record
- Improving outlook for South Africa business
- Cheap versus peers
- Very cash generative
- Tricky time for home improvement
- Profits expected to fall this year
The recent drop in housebuilding activity has been dramatic: housebuilders have recently experienced a 25-35 per cent fall in demand. However, the slump in RMI work has been more sustained, with the post-pandemic DIY boom having petered out in the first quarter of 2022. Share prices in the sector had started to turn six months before that in the autumn of 2021.