The South African building materials market is telling a confusing yet interesting story about developments in the second half of 2009.

Building materials retailer Cashbuild, which operates primarily at the lower end of the market, posted a 27 percent drop in headline earnings a few months after reporting its "best year ever" in September 2009.

This follows the group's claims last year that its market would continue to grow as it remains supported by the government's drive to increase home ownership among the poor.

While this may be the case, the people in Cashbuild's target market are possibly feeling more vulnerable in terms of unemployment than to those at the middle to upper end of the market.

One analyst noted that the sharp decline that hit the middle residential market was over, with this market now set for recovery. The lower end of the market, on the other hand, has had to contend with the impact of retrenchments.

While the results of building materials group Iliad Africa, which caters to the middle to upper end, showed a 69.5 percent decrease in earnings, analysts believe the reason Builders Warehouse did so well in the second half of last year (revenue up 8.9 percent) was because it catered to the upper end of the market - a market thought to have been hard hit by the recession.

Source: www.busrep.co.za