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Baird Survey: Industrial Distributors See Sales Drop in 4Q
January 13, 2009
The fourth quarter Baird Industrial Distribution Survey, from Robert W. Baird Inc., indicates the industrial economy is in recession.
On average, respondents' fourth quarter revenues were down significantly, with increased pricing offsetting unit volume declines. Expectations are for continued declines through 2009, though the trajectory should not be as severe as it was in recent weeks which were negatively impacted by abnormal holiday closures.
Baird's Industrial Distribution Research Team, led by senior research analyst David Manthey, CFA, collected feedback on fourth quarter results from nearly 300 independent and captive distributors with combined annual revenue in excess of $30 billion. Key survey findings include:
Average revenues were down significantly in fourth quarter 2008 at -3.9% vs. essentially flat in 3Q08. Overall pricing remained positive, adding 1.1%, although down from 2.9% last quarter.
Six-month outlook is for continued declines in the first half of 2009 with an expectation of -3.6%.
Respondents are anticipating moderating declines in second half of 2009 with an overall 2009 revenue expectation of -2.3% implying -1% in second half of 2009.
Abnormal holiday closures added to December/January weakness, with 57% of respondents indicating some level of closures over the recent holiday weeks.
Areas of strength: Over the next six months, growth is only expected by distributors of Rental Equipment with the most severe declines expected by distributors of datacomm products, fasteners and roofing/building Materials. The most promising end markets include wholesale trade, general contractors and chemical.
Respondents also reported that inventory decreased with revenue, but is to some extent seasonal. In addition, 73% of respondents reported seeing the effects of the credit crisis vs. 54% last quarter.