HVACR Distributor Sales Up 5.6% in 2012 - Modern Distribution Management

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HVACR Distributor Sales Up 5.6% in 2012

Sales in December declined 1.8 percent.

Average U.S. HVACR distributor sales declined 1.8 percent in December, but increased 5.6 percent in 2012, according to Heating, Air-conditioning and Refrigeration Distributors International’s Monthly Targeted and Regional Economic News for Distribution Strategies (TRENDS) report.

The results followed encouraging activity levels in October and November and may have been influenced by the timing of the holidays.

“The quarter’s performance was similar to Grainger’s, where average daily U.S. sales were up 4 percent in October and up 6 percent in November before declining 1 percent in December,” said Brian Loftus, market research and benchmarking analyst, HARDI.

The December slowdown was not unique to distributors. The Bureau of Economic Analysis's preliminary estimate for fourth-quarter GDP growth points to a 0.l percent decline.

“A likely explanation for the weak December is the hesitancy from businesses and consumers over the approaching fiscal cliff,” said Andrew Duguay, senior economist, ITR Economics. “The month progressed with no clear sign of what tax rates would be available in 2013.”

The annual growth rate of 5.6 percent is the highest since October 2011, signaling further growth is likely in coming months. “Now that the American Taxpayer Relief Act has been passed, we expect some of the hesitancy businesses felt will fade as they resume investments in equipment and repairs,” said Duguay.

December closed out a fourth quarter that exhibited distinct performance differences between the seven regions tracked in the TRENDS report. “The strongest revenue-per-employee gains of 2012 were experienced in the West, Southwest and Central Regions,” said Loftus.

While sales per employee increased slightly in the Northeast in 2012, it remained flat in the Mid-Atlantic despite the rebuilding efforts of the past two months. The soft sales helped keep the days-sales-outstanding (DSO) below 50 days for the group.

Unit sales in December increased 6.4 percent year-over-year, led by growth in ducted sales.

“The down side of the Taxpayer Relief Act is a 2 percent tax increase on average for consumers in 2013,” said Duguay. The report indicates that it may take a couple of months to determine the impact of the increase on consumer confidence.

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