FIN Survey: Distributors See Bigger Bottom Line

John Wolz

More inventory turns and a growing bottom line characterized the response from many distributors in 2005.
Inventory turns rose 13.5% to 4.2, a level not seen since 2002. The increase in 2005 erases a record low 3.7 in 2004, the lowest inventory turnover index since FIN started tracking it in 1994.
Cost was a widespread issue for distributors, with eight out of 10 claiming cost increases. Only six out of 10 distributors predict cost increases in the next six months.
Margins edged up, however. The FIN Gross Margin Index rose 5% to 40.4% in 2005 on “significant” bottom line improvement reported by about one-third of distributors.
Just over 80% of distributors hiked prices in 2005, with an average increase of 11.1%. Only 15.2% kept prices stable during the year, and for the second year in a row no distributors reported prices cuts.
However, nearly 35% of distributors plan to leave prices unchanged during the next six months, with about 44% anticipating an average price increase of 6.1%. Just over 4% plan to cut prices an average of 6.3% during the first half of 2006.
Roughly 67% of distributors reported problems with fastener availability, down from the 80% who had problems obtaining product in 2004. Of that total, 15.2% reported “significant” difficulty procuring fasteners last year. \
�2005 FastenerNews.com