Robert W. Baird & Co., Inc., has completed its latest quarterly survey of the gases and hardgoods industry in partnership with CryoGas International.
This survey provides a comparison of the industrial gas and hardgoods distribution group to overall distribution of groups like ours.
David J. Manthey, CFA, gave a presentation on the survey at the recent GAWDA Spring Management Conference in Savannah, Georgia. Manthey is Senior Research Analyst for Industrial Distribution & Services at Baird. He described the larger economy in which our industry operates as “a world awash in too much of everything.” This overload puts pressure on markets and has created lackluster growth. “2016”, says Manthey, “will be a year fraught with challenges.”
The first quarter 2016 Baird survey results of independent gas distributors support Manthey’s comments, reporting the revenue trajectory for gases in 1Q16 at 2.1 percent, a nearly four-percent downward shift year-over-year, and hardgoods revenue at -0.2 percent. The pricing trajectory had a slight uptick for gases from 4Q15, at 1.7 percent, while hardgoods is roughly flat here as well, at -0.1 percent.
A sign of things to come
Looking ahead to 2Q16 and the rest of the year, the vast majority of respondents said they expected hardgoods inventory to remain about the same, with more pessimism than optimism about decreases than increases to come. In the meantime, the revenue outlook for the remainder of 2016 looks to be on an upswing versus last quarter, putting gases at 3.9 percent year over year and hardgoods at 2.1 percent.
Respondents expressed worry about competition in the hardgoods market and tight supplies of argon and carbon dioxide, showed hope in growth through new markets, and said that sales were expected to be roughly flat as compared to 2015.
The Air Liquide effect
A full 83 percent of those surveyed felt that Air Liquide’s acquisition of Airgas would reshape the US industrial gas market, and while most (55%) said they expected consolidation to continue at the current pace, 21 percent also said they expected more independent companies to spring up in the next 10 years.
The same amount (21%) said the industry would look the same, while three percent expected consolidation to accelerate between now and 2026.
The Baird/CryoGas Survey is conducted quarterly. For more information or to learn how to participate contact firstname.lastname@example.org.