The Construction Products Association's latest State of Trade Survey indicates that, following a disappointing Q2 and Q3, heavyside sales fell once again in Q4 but lightside sales rose.
A lack of demand has been consistently cited as the key constraint on sales growth since the beginning of the financial crisis in 2008.
In Q4, 84% of heavyside and 79% of lightside firms indicated that this lack of demand was likely to constrain production over the next 12 months.
A small proportion of of product manufacturers stated that the availability of finance might also be an issue in 2013.
Commenting on the figures, CPA economist, Milja Keijonen, said: "After two disappointing quarters, sales of heavyside products fell once again due to difficult market conditions in the construction industry, where output fell 9% in the past year. However, sales of lightside products rose in Q4 as the difficult domestic market was offset by strong exports to fast growing Asian economies.
"Looking ahead, both heavy and lightside manufacturers expect this to continue. Heavyside manufacturers anticipate sales to fall in 2013 due to a subdued domestic market, where construction output is forecast to fall by 2.2%. However, lightside manufacturers predict sales will increase in 2013, once again, driven by export growth.
"2012 was a difficult year for the industry, certainly for heavyside manufacturers and 2013 is also likely to be extremely challenging," Ms Keijonen commented.
The CPA Trade Survey also revealed that over the past 12 months existing production capacity has been significantly under-utilised. Forty-three per cent of firms indicated that 70% or less of the existing capacity had been in use in 2012.
Only 4% of heavyside and 10% of lightside companies employed more than 90% of their existing production capacity in the year to Q4.
Over the next 12 months, capacity utilisation above 90% is anticipated to rise sligthly with 7% of heavy 14% of lightside firms predicting to produce above 90% capacity.
"Lightside manufacturers are going to be heavily reliant upon exports if they are to achieve significant growth in the next 12 months," said Ms Keijonen. "The risks for product manufacturers are on the downside, due to the prevailing economic conditions and the effectiveness of government initiatives to boost construction."
Other key points include:
- Thirteen per cent of heavyside companies reported a fall in quarterly sales, while 46% of lightside firms indicated that sales were higher compared with Q3.
- Nine per cent of heavyside manufacturers experienced a decline in sales year-on-year, on balance, while 21% of lightside companies stated that sales were higher on an annual basis.
- Seventy-two per cent of heavyside, and 79% of lightside firms stated that costs had risen from a year ago.
According to 6% of heavyside and 13% of lightside manufacturers, employment fell, on balance. However, improvements in labour market conditions are anticipated in 2013.