Building products supplier SIG reports £10m losses

Sheffield-based building supplies firm SIG has dropped into the red in half year trading, with losses reaching more than £10m.

It reported a statutory loss before tax of £10.7m this morning, after £49.0m of non-underlying items, compared to profits of £38m in the same period last year.

It disposed of its £100m flooring business earlier this year in a deal arranged by Leeds private equity firm Endless after the business reported massive pre-tax losses. It reported losses of £106.3m for the year to December 2016, forcing former chief executive Stuart Mitchell out of the business after three consecutive years of decline.

Despite the drop in profitability, SIG has reportedly “stabilised” the business, with half year revenues for the six months to 30 June, were up 8.6% to £1.4bn. Full year expectations are unchanged said chief executive Meinie Oldersma.

Dividends per share of 1.25p were recommended, a 31.7% drop on those announced in the same period last year.

Meinie Oldersma, chief executive, said: “In the first half of 2017 the business delivered underlying PBT in line with guidance. Although lower than the first half of last year, as previously indicated, it represents an increase on H2 2016, providing some evidence that business performance has stabilised. However, there remains considerable work to be done to improve returns over the medium term.

“Following management actions taken in the first half to strengthen the Group’s balance sheet we have made good initial progress on our key short-term priority to reduce leverage, which has decreased to 1.6x (net debt to EBITDA). We will continue to focus on leverage reduction in order to deliver our targeted range of 1.0 – 1.5x during 2018.

“Following my appointment as CEO, I commissioned a comprehensive review of the Group’s strategy, use of capital and cost base. The initial phase confirms that the business has real opportunity to improve profits and returns over the medium term, but also highlights the execution challenges in delivering these upsides. We intend to report progress from this review in Q4 2017.

“In terms of outlook the key risk is the challenging environment created by macro uncertainty in the UK, although this may partly be mitigated by continuing improvement in confidence in Mainland European markets. However, we continue to expect the business to show a stronger second half (excluding H1 property profits) and our expectations for the full year are unchanged.”

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