The fourth-quarter Baird Industrial Distribution Survey indicates that average fourth quarter year-over-year revenue declines improved moderately compared to the third quarter, with the fourth quarter forecast much better than current quarter trends against easing comparisons.
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In the survey, pricing and gross margins remained stable despite competitive behavior by some distributors. Inventory destocking has tapered off.
“Survey results indicate that U.S. manufacturing and residential end-markets are showing signs of life,” said David Manthey, CFA, Baird’s senior research analyst who leads the firm’s Industrial Distribution sector research. “However, commercial construction trends are expected to remain bleak through 2010.”
Baird’s Industrial Distribution Research Team collected feedback on fourth quarter results from approximately 400 independent and captive distributors with combined annual revenue of $65 billion. Key survey findings include:
- Average revenue declines improved moderately in the fourth quarter at -12.4% year over year compared to -15.6% year over year last quarter.
- Pricing appears to be stable, as average pricing was -1.3% year over year in the fourth quarter compared to -1.9% year over year last quarter.
- Respondents’ first quarter outlook is better than current quarter trends at -2.2% year over year against comparisons that ease significantly.
- Inventories destocking finally appears to be alleviating, however, no material re-stocking is expected near-term.
- Gross margins remain stable, with most respondents reporting no change vs. 3Q09.