OCTOBER CHANNEL DEBT IMPROVES

By NZHJ November 19, 2015 Building Materials

Debt levels in the hardware channel are looking positive, but that picture may be somewhat flattering to deceive.

Alan Johnston at CreditWorks (www.creditworks.co.nz) reports a significant drop off in aged debt in several sectors – particularly Building Materials (now sitting at just over 50 days from over 60 in September), Plumbing (now 48 days, down from 57) and Concrete (46 days down from 56).

This improvement, he says, can be put down to half-yearly bad and doubtful debt write-offs, which contributed to an overall slight reduction of DSO to 47 days.

The volume of total debt (see graph above) is steady at just under $1.6 billion, although bad debts written off were countered by an increase in sales volume, leaving an overall neutral position in debt levels.

(See our snapshot of debt in September to see how the recent period is tracking.)

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