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June Distributor Sales Growth Slowing

August 15, 2011
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COLUMBUS, Ohio — Heating, Airconditioning and Refrigeration Distributors International (HARDI) announced North American HVACR average distributor sales for June 2011 were up 6.8 percent from the same month last year, nearly identical to May’s results. June, however, marked the fourth out of the last five months in which the annual distributor growth rate declined. HARDI’s Monthly Targeted and Regional Economic News for Distribution Strategies (TRENDS) report showed growth in six of seven U.S. regions, two of which experienced double-digit improvement compared to June 2010. Canada failed to maintain momentum from last month’s strong rebound with June delivering essentially flat performance.

Inventory levels were up in every North American region for the second consecutive month. Days Sales Outstanding continued its fifth consecutive month of increases with June up a whopping 10 percent over last month. One of the most positive figures was a 30 percent increase in distributor productivity reflected by sales per employee, as consistently high temperatures drove business in June for much of North America without significant staffing increases this season.

“The HVACR distributor market is transitioning into slower annual growth, in tandem with the U.S. economic landscape. Average member sales over the past 12 months were positive, up 8.9 percent from last year at this time, but the growth is slower than the 10.0 percent plus annual growth rates recorded in the winter months,” said HARDI economist Andrew Duguay of the Institute for Trend Research (ITR).

“June’s numbers reinforce what we heard in our annual Mid-Season HVAC Distributor Survey, and what we’ve seen in all of the publicly-traded quarterly reports,” said HARDI executive vice president and COO Talbot Gee. “The residential market is softer than expected despite the heat, and our forecast for significant slides in high-efficiency sales is playing out to an even greater degree.” This is in contrast to commercial markets outperforming expectations fueled primarily by repairs and replacements rather than new construction.

“June’s unitary sales data is hinting that we may have underestimated the impact of R-22 units,” said Gee. “And we appear to have been overly optimistic that we’d see fewer homeowners choosing to repair rather than replace units this year.”

Publication date: 08/15/2011

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