High Lumber Prices Boost Sales & Profits of Building Materials Distributors

Freedonia experts have frequently posted here about lumber prices and their effects on the building construction market. Today, however, it is time to look at this issue from another side – namely, that of the companies that sell lumber to construction professionals and DIYers.

A number of these firms are publicly traded, and they reported strong growth in sales and profits due to both the higher demand for lumber and the higher prices that the material has been commanding:

• Boise Cascade credited a 25% increase in sales prices for plywood as contributing to its strong quarterly performance.
• PotlatchDeltic reported record-breaking third quarter sales due to high lumber prices.
• Both Builders FirstSource and BMC posted strong gains in sales and profitability because of higher lumber prices.

The question these firms (and others) will face going forward is whether these record profits can be maintained. While new home building activity remains strong and there is still a high level of interest among homeowners in home improvement projects, other factors may point to a less rosy outlook:

• Lumber mills have boosted production in response to heightened demand for building materials.
• An anticipated retreat in demand is expected as construction activity slows with the onset of winter.
• DIY sales may fall off, as many homeowners have completed the projects they wanted to do and may not undertake additional work.
• The end of the hurricane season will reduce demand for plywood and other materials used to board up windows and perform emergency repairs.

Going forward, Freedonia experts will continue to monitor lumber prices – and the companies that make and sell lumber and building materials – as part of our extensive coverage of the US construction industry.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products. Freedonia also offers an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.