Growth Seen for U.S. Composite Decking, Railing Market
authors QR Staff | August 17, 2021
The global market for composite decking and railing, estimated at $2.9 billion last year, is projected to reach $6.5 billion by 2026, growing at a rate of 14.1 percent annually “in a significantly transformed post COVID-19 marketplace,” according to a study by Global Industry Analysts Inc., a San Francisco-based market research company.
Pegged for similar growth is the composite decking and railing market in the U.S., estimated at $1 billion this year, with the U.S. currently accounting for a 32.3 percent share in the global market, Global Industry Analysts said. China, the world’s second largest economy, is forecast to reach an estimated market size of $1.1 billion by 2026, the research firm also noted. Among other noteworthy markets are Japan and Canada, each forecast to grow annually at 11.3 percent and 13.2 percent respectively.
Major growth drivers for the market include a continued recovery in the worldwide construction industry, as well as continued technological advancements on the part of major product suppliers, according to Global Industry Analysts.
“Homeowners are increasingly choosing composite decking and railing systems over systems made of natural wood because of the many beneficial features of the former, including lower thermal expansion and color fading and higher resistance to slip among others,” the company said. “Composite decking is enjoying increasing popularity over wood owing to its appealing benefits, primarily lower maintenance and enhanced aesthetic appeal.”
Market analysts also noted that manufacturers continue to introduce new product lines at affordable price points.
“The influx of new and economical composite decking is narrowing down the price premium in comparison to wood, which is likely to bolster market growth over the coming years,” analysts observed, adding that the market “is poised to gain from access to diverse finish and color options, along with increasing homeowner investment in remodeling or renovation projects.”
In related news:
The AZEK Company Inc., the Chicago-based manufacturer of outdoor living products – including TimberTech decking and Versatex and AZEK Trim – has announced financial results for the third quarter, ended June 30, of the company’s 2021 fiscal year.
Net sales for the three months ended June 30 increased by $103.7 million, or 46.4 percent, to $327.5 million from $223.7 million for the same quarter last year, according to the publicly traded company. Gross profit for the three months ended June 30 increased by $31.7 million, or 42.3 percent, to $106.9 million from $75.1 million for the three months ended June 30, 2020, the company added.
“The AZEK Company once again delivered strong revenue and growth within the quarter, driven primarily by solid execution and underlying demand for products across channels in our residential businesses, and improving sales trends in our commercial segment,” said Jesse Singh, AZEK’s chief executive officer. “During the quarter, we completed the second phase of our approximately $230-million, multi-phase expansion plan and delivered over 50 percent growth in our residential segment.
“While we saw increasing inflation and availability challenges in materials, labor and transportation, we were able to navigate through these challenges to meet the exceptional underlying demand and modestly replenish inventory in the dealer channel,” Singh said.
“We remain excited about what the future will hold for AZEK and believe we are well positioned for sustainable growth, fueled by a strong outdoor living market, ongoing product expansion and material conversion opportunities,” Singh added. “Given the continued market strength, our recent capacity additions, pricing actions and our disciplined approach to execution, we believe we’re well positioned to deliver strong growth and margin expansion as we look ahead to 2022.”
Trex Company, Inc., the Winchester, VA-based supplier of composite decking and railing and related outdoor living products, has reported second-quarter 2021 results and year-to-date performance.
Consolidated net sales for the quarter were $312 million, 41 percent ahead of the 2020 second quarter, the company reported. Trex Residential net sales increased 43 percent to $299 million, with Trex Commercial contributing $13 million, the company added.
Net income for the quarter was $61 million, compared to net income of $47 million in the second quarter of 2020.
“Our strong second-quarter revenue growth was driven by sustained broad-based demand across all Trex Residential product lines and market share gains from wood,” said Bryan Fairbanks, President and CEO, adding that, as expected, higher raw material costs and logistic expenses pressured second-quarter gross margin.
“The completion of our $200-million capacity expansion program in May enabled Trex Residential to convert significant customer demand into an impressive 43 percent increase in sales,” Fairbanks said. “With the largest part of our capacity expansion behind us, we will now pivot to cost-reduction projects and continuous improvement opportunities. These efforts will be focused on automation, modernization, energy efficiency and raw material processing.”
“The continued strength of the repair and remodel market together with our brand leadership and increased capacity have driven our impressive year-to-date top line growth, Fairbanks said. “We are encouraged that 2021 will be another year of strong growth for Trex.”