32 CHEMICAL DISTRIBUTION
HAPPY NEW YEAR? OUTLOOK • CBA’S FINAL QUARTERLY SURVEY RESULTS FOR 2019 SHOW CONTINUED UNCERTAINTY THANKS TO ANOTHER BREXIT DELAY AND MARGIN PRESSURES, BUT SLIM IMPROVEMENTS IN SALES THE CHEMICAL BUSINESS Association’s (CBA) last quarterly trends survey for 2019 concluded a year of caution, uncertainty and concern, confirming the results recoded earlier in the year. The answers provided by CBA members offer a detailed insight into how business is coping and where the next three months are predicted to be heading, bearing in mind the unknowability (at the time) of the December general election and the end-January Brexit deadline. There is still a deep-seated level of uncertainty in the UK’s chemical distribution
UNCERTAINTY APPEARS TO BE THE ‘NEW NORMAL’ FOR CHEMICAL DISTRIBUTORS IN THE UK
community, but there has been a recovery from the drastic fluctuations in opinions seen in prior surveys, indicating that, perhaps, a new sense of normality is building. “The recovery reported in this survey, whilst limited, is very welcome,” explains CBA’s chief executive, Peter Newport. “It remains difficult to assess the continuing impact of the overhang of stock building in relation to the past Brexit deadline of 31 October or the preparations for the prospective deadline of 31 January next year.” HARD DATA Regarding order books, the November 2019 survey shows a positive balance of +13 per cent, a strong recovery from the -26 per cent negative balance reported by CBA’s July
survey. Readers may remember that there was a large fluctuation at the start of 2019 when businesses began stockpiling for the 31 March Brexit deadline, when the number of respondents reporting a growing orderbook rose from 14 per cent to 34 per cent from November 2018 to April 2019. This then tumbled drastically to -60 per cent in the July survey, highlighting the difficulties the industry has faced throughout 2019. Looking at sales volumes, the latest results show a return to positive territory (+12 per cent). This is an acceptable recovery from the negative balance of -17 per cent reported in July’s survey, but there is still a way to go. Members were then asked to forecast numbers for the next three months, predicting a positive trend of +18 per cent for sales volumes. This is another welcome improvement from the -14 per cent threemonth outlook reported in the last survey. Frustratingly, sales margins remain under pressure and employment prospects are very weak. Sales margins have recovered to the point of +2 per cent of respondents experiencing improved sales margins, but future forecasts remain negative with -8 per cent of companies predicting a decline over the next three months. However, this has improved from -18 per cent in the previous survey. Only +2 per cent of companies are predicting higher employment levels over the next three months, continuing record low levels. Despite the negatives that have been experienced throughout 2019 and a distinct lack of clarity, members have been tenacious and continued in an ever-changing environment. Newport says: “Our members are determined to maintain supplies of critical chemical components to customers but financing historically high stock levels and availability of regulatory compliant warehousing is placing a strain on the resources of many companies.” The CBA’s latest online trends survey was conducted from 7 to 19 November 2019 and is based on responses from 51 member companies. Respondents were aked to provide information on order books, sales, sales margins and employment, on a ‘better-worsesame’ basis. www.chemical.org.uk
HCB MONTHLY | JANUARY 2020
