Going through the roof
THE ROOFING and cladding market in SA is on the fast track, fuelled by the buoyant demand in the construction industry for building materials and the infrastructural requirements in the run-up to 2010 Fifa World Cup.
The industry is valued at about R7,7bn a year and is expected to continue to grow. “We estimate the market in SA to be around 200m sq m, with metal roofing and cladding making up around 39% of the total,” says Stephan Schoombie, marketing manager of Global Roofing Solutions (GRS), one of the industry’s largest independent unlisted firms.
He says GRS is seeing annual growth of about 10% in the demand for metal roofing.
“With a real demand for housing, and industrial expansion due to current economic growth patterns worldwide, we believe this growth is sustainable.”
Scarcity of office and warehouse space is making the commercial sector attractive, although growth in the residential sector is slowing.
GRS expects the residential sector to grow on average 4% to 6%, in line with economists’ expectations.
The industry consists of metal roofing suppliers such as Clotan Steel, GRS (owned by management, with substantial holdings by Absa Bank and empowerment firm Mediro Industrial Holdings), Harvey Roofing (a subsidiary of Murray & Roberts), MacSteel Roofing, Safintra, and alternative roofing material suppliers such as Everite (a subsidiary of Group Five), Lafarge and Marley.
Because most roofing and cladding companies are not listed, it’s difficult to get wider comment.
According to Group Five unaudited results for the six months to 31 December 2006, Everite’s revenue was R232m compared with R216m in the previous period. Everite plans to invest about R50m to increase capacity to take advantage of the ever-increasing low-cost housing initiatives.
Harvey Roofing, which controls about 2% of the coated metal roof market with a revenue cycle of R190m to R230m, operates in the affordable housing space.
Director Lee Cochrane says: “We’re not seeing any spin-offs at the moment on low-cost housing.” This, however, is likely to change following Finance Minister Trevor Manuel’s Budget announcement that the housing minis- try will receive an additional R2,7bn, bringing the total allocation for the next three years to R32bn.
Harvey Roofing and Everite are in line to supply municipalities, which will use the additional allocation from Manuel to build more affordable housing.
Asked if GRS would consider listing on the JSE’s AltX, Schoombie says: “At this stage, the company can fund its expansion plans and capital requirements from other sources, so a JSE-listing is not on the cards in the near future.”
Growing demand for products in the next 10 months will come from within the industrial sector, spurred by the requirement for 500 000 houses a year up to 2011, with Gautrain, the Soccer World Cup preparations and Government’s planned infrastructure spending kicking in. No wonder the roofing and cladding companies are positive about growth prospects.
“We believe there will be sustainable growth up to at least 2012 in the building industry,” says Schoombie.
No ceiling on growth. Stephan Schoombie