2011 a ‘disappointing year' for distributors, says HARDI
The association reported that the North American HVACR average distributor sales for December 2011 were down 12.2 percent from record growth in December 2010. This could be attributed to federal tax credit expirations, HARDI said.
This is also the second consecutive month of decline after 12 straight months of growth, according to HARDI. HARDI distributors’ annual growth rate fell below 5 percent for the first time all year. HARDI’s monthly Targeted and Regional Economic News for Distribution Strategies (TRENDS) report showed declines in all seven U.S. regions, but each U.S. region ended 2011 overall in the positive. The opposite was true for Canada, which was the only HARDI region to see growth in December, but not enough to pull 2011 to the positive. U.S.-only distributor sales were down 12.5 percent for the month.
HARDI officials said that a sign for optimism in 2012 is that all eight HARDI regions reported higher inventory levels than the same time last year.
“December was a difficult month for distributors,” said HARDI economist Andrew Duguay. “Average sales for the month were 12.2 percent lower than December of 2010. Eighty percent of distributors reported that their sales in December were lower than last year. The clear cause of the poor year-over-year comparisons is the $1,500 energy-efficiency tax credit expiration at the end of last December, causing a boost in sales as people rushed to buy units and claim the credit. December weather was also seasonably mild throughout the majority of the U.S., which may have caused a minor, short-term shifting of consumer habits in heating equipment purchases.”
Days of sales outstanding, a measure of how quickly customers pay their bills, snapped a four-month decline with very modest improvement in December. Distributor productivity reflected by sales per employee backtracked for the sixth consecutive month, down 5 percent from last month and nearly 30 percent from its July peak.
“Last February we forecasted 5 percent growth for HARDI distributors in 2011 having already seen nearly across-the-board price increases,” said HARDI Executive Vice President and COO Talbot Gee. “But unfortunately, the market failed to outpace those price increases and ended on a disappointing note. We knew the fourth quarter comparisons were going to be tough, and our average December declines still significantly outperformed the 30 percent-plus declines we saw in equipment volumes.”