ABOVE: Total Debt on CRISworks database to June 2018. (Source: CreditWorks).
It doesn’t rain but it pours
“The bad weather continues to impact on the construction industry, and volume of sales was down on the previous months’ peak,” says CreditWorks’ GM, Alan Johnston.
In terms of debt, that means the sector is now operating at about the same level as this time last year, even though weather conditions were far more favourable for building at the same time 12 months ago.
Debt exposure to flatten?
Adds Alan Johnston by way of an outlook on debt: “It is noticeable that in past years debt exposure has fallen away during the winter months (after June) so at the very least, I expect July’s figures to reflect a flattening of the market.
“Again though, having said that, overall volumes are still at levels exceeding 2017.”
DSO to improve?
As has been the case in the past, when sales fall, debt collection improves, hence a slight improvement in DSO across the board in June, in all of the building sector groups, on average about 1.5 days.
Says Alan Johnston : “I expect this improvement to continue in the next few months, with the worst case scenario being a levelling off in DSO, while sales volumes are impacted by weather conditions and remain lower than expected.”
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BELOW: DSO (Days Sales Outstanding) by sector July 2017-June 2018. (Source: CreditWorks).