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Midyear Business Report CED 2013 Midyear Business Report Dealers Watch for Second-Half Pop Despite external variables, including one of their biggest concerns – health care costs – dealers try to stay focused on what they can control. By Joanne Costin If you had to describe how the market will evolve in the second half of the year, "moving from cautious to cautiously optimistic" might do it. In AED's recently completed Midyear Business Survey, optimism is reflected in dealers' projections for the second half of 2013. The first half, while positive, did not have the strength of 2012. Where We're At So Far According to the survey, the majority of dealers experienced positive revenue growth in the first half. But, far fewer dealers reported double-digit revenue increases compared to last year's midyear business survey. (23.6 percent compared to 45.0 percent in 2012). Overall, fewer dealers reported positive growth in total revenue (57.3 percent in 2013, compared to 75.0 percent in 2012). The year-over-year comparison also shows that more dealers reported lower revenues in the first half than in 2012 (25.9 percent compared to 20.0 percent in 2012). Weather impacted dealers both positively and negatively in the first of this year. Unusually wet weather conditions dampened sales in the Midwest, but tornadoes and storm damage gave dealers in other areas a lift. "We lost 30-45 days just to moisture," said Bruce Logan, owner and president of Logan Contractors Supply, with locations in Omaha, Neb., Des Moines, Iowa, Kansas City, Mo., and the Quad Cities. According to Logan, whether or not the company can make up the sales in the second half of the year will depend on how long the season will extend into the year. Due to the consolidated work season he has revised his forecast down 5 percent for the year. "At all locations rental has been stable," said Logan. "Given the weather, that's an increase. We are just now starting to see contractors coming in. There's work out there. It's just a matter of us having it in stock and delivering it when we need to." At the midyear point, more dealers showed an increase in service sales than any other area, including red-hot rental. Sixty-three percent of dealers who responded reported increased service revenues, while 62.8 percent had increased rental revenues. Comparatively, 17.2 percent of dealers experienced declining service revenues, while 27.9 percent experienced declining rental revenues. New equipment, used equipment and parts revenues all increased for just over half of the dealers surveyed. Contractor Mood Shift Despite first-half revenue growth that was somewhat lackluster compared to 2012, optimism appears to be creeping into the market. Looking toward the second half of the year, the number of dealers who characterized their customers' business mood as skeptical declined from 17.5 percent in 2012 26 | www.cedmag.com | Construction Equipment Distribution | August 2013 26_Midyear_Feature_KP.indd 26 7/25/13 12:36 PM