Adds quotes, particulars on outlook, background
SYDNEY, June 3 (Reuters) – Australian {hardware} chain Bunnings expects elevated timber costs to squeeze its margins for as much as one other yr, its managing director stated on Thursday, as a increase in residence enchancment and development drives a surge in demand.
“We take into consideration timber (and) we have in all probability obtained one other six to 12 months of some problem,” Michael Schneider stated in an investor briefing hosted by Bunnings proprietor Wesfarmers Ltd WES.AX.
“Feedstock is in a fairly good area, however getting it by way of the mills and, clearly, the robust demand is placing stress on,” added Schneider, utilizing the time period for uncooked timber that’s processed into usable wooden merchandise.
Amid restrictions on motion to cease the unfold of COVID-19, individuals world wide are in search of larger properties or embarking on renovation initiatives, sapping provide and driving up market costs for crucial part, timber.
Supported by authorities stimulus funds, Australian approvals to construct now homes leapt 67% to a report excessive within the month of April, in comparison with the identical month a yr earlier within the preliminary phases of pandemic-induced lockdowns. America recorded comparable figures.
NASDAQ-listed lumber futures have quadrupled in a yr, in accordance with the U.S. trade’s web site.
Schneider stated Bunnings, which dominates Australian residence enchancment with 50% market share and no shut rival, was reluctant to place up shelf costs and hoped to sort out the margin stress by chopping prices.
“We do quite a lot of work with our suppliers to take a look at ways in which we will offset prices by way of improved efficiencies in provide chain or quantity purchases,” he stated.
(Reporting by Byron Kaye; Modifying by Muralikumar Anantharaman and Stephen Coates)
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