Foodservice Equipment Reports

We’re Sticking With Our E&S Market Forecasts

After much debate, our forecasting partner John Muldowney and I are sticking with our current equipment and supplies market estimates and forecasts for 2014 and 2015. Last July, for our annual President’s Preview E&S Market Forecast, we set 2014 market growth (at the manufacturers’ level) at 4.4% nominal and 2.3% real and forecast growth of 4.8% nominal and 2.5% real for 2015.

Two factors led us to consider revising these numbers downward. First, E&S sales growth slowed unexpectedly in the fourth quarter 2014. The nine publicly reporting companies that John—principal at Clarity Marketing— tracks for us, and MAFSI’s Business Barometer both recorded the slowdown. The public companies only managed 2.7% combined sales growth in the quarter; the Barometer, which tracks reports of sales changes by manufacturers’ representatives, rose only 2.9% 4Q/14. This slowdown caught us a bit by surprise because, thanks to surging employment and plunging gasoline prices, the operators were finally seeing some genuine good news on the customer traffic and sales fronts all during the period. 

Then, after a relatively mild beginning of the winter in the U.S., big snowstorms, especially in the Northeast, began to undercut the general economy and foodservice sales.

So, John and I thought we might have to reconsider. But now that we have the MAFSI Barometer and the public company numbers for the first quarter 2015, we’ve decided our 4.8% for this year still looks good. And while I argued to take down our estimate of 2014 sales growth a bit, John convinced me 4.4% is still a solid estimate. He pointed out the nine publics, even with Manitowoc’s restructuring and EveryWare’s supplier issues leading to sales declines, saw combined revenue growth of 5% for all 2014, with the six equipment companies up 6%. The big E&S dealers represented by FER’s Top Dealers also reported strong 10.6% growth in 2014. Play these numbers off the MAFSI Barometer’s 3.3% average for the year and, as John said, it comes out closer to 4.5% than 4%. So we’ll keep 2014 at 4.4%.

And E&S sales bounced back in 1Q/15. The MAFSI Barometer was up a strong 4.7% for the quarter and the reps report strong quotation and consultant activity. Their forecast for the second quarter is 4.6% growth. It’s true the combined public-company numbers rose only 1.1% 1Q/15, but Manitowoc sales fell nearly 10%, Unified Brands was off 14% and we estimated EveryWare to be down 5.3%. Middleby, ITW FEG and Rational North America posted double-digit gains and Standex Foodservice saw sales grow 8%. So there’s quite a bit of strong growth behind the overall numbers.

So right now, we’ll continue to forecast 4.8% growth this year. As we’ve said before, we believe this year will be the peak of the current E&S market cycle. We expect growth to begin to slow as we move into next year.

To find out what our forecasts will be for 2016 and beyond, you’ll need to sign up for our President’s Preview E&S Market Forecast meeting, scheduled for July 28, at the Westin O’Hare in Rosemont, Ill. Information of the meeting and the registration form can be found at fermag.com/event-calendar/presidents-preview.html

Cheers,

 

Robin Ashton

Publisher

rashton@fermag.com

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