Listed construction supplier impacted by poor weather

Sheffield-based SIG, a supplier of specialist building products, believes its ‘transformation is well underway’ even though its first half results were impacted by poor weather. 

For the six months ending 30 June, the listed company reported statutory pre-tax profits of £19.9m, up from statutory pre-tax losses of £15m in the same period last year; however, its underlying pre-tax profits dipped 21% from £34m in the same period last year to £26m this year. 

SIG reported a 4% decrease in statutory revenue to £1,381.7m (H1 2017: £1,439.2m) due to what it said were“significant challenges in the UK market.” Its like-for-like sales were impacted during the period, rising 0.4% (H1 2017: +2.9%).

Sales in the UK & Ireland declined by 2.3% on a like-for-like basis, it said reflected continuing macro uncertainty in the UK and the impact of colder than usual weather in February and March.

SIG, which employs around 9,000 people across the UK, Ireland and Mainland Europe, did experience better success in its overseas operations.

During this period, SIG Germany and SIG France delivered operating profits of £3.3m (up 3%) and £13.1m (up 6%) respectively. The Group’s Mainland Europe businesses continued to perform well, with LFL revenues increasing by 2.8% for the period.  

Meinie Oldersma, Chief Executive Officer, of SIG, said: “Ten months into our transformation of SIG, progress is well underway and we are starting to see evidence of delivery.

“Leverage has reduced, return on capital employed has increased and the refocus of our portfolio of businesses through exit or divestment is largely complete. Gross margins are improving in key businesses, operating costs are under control and working capital is beginning to fall.  Our senior leadership team is in place, our management capability is improving and better data is beginning to make a difference to the quality of our decision-making.

“The first half did not provide the trading backdrop we wanted, with significant challenges in the UK market as a result of the poor weather in the early months of the year and continuing macro uncertainty.

“This has impacted both our UK revenues and operating profit in the year to date, which are behind where we had hoped they would be at the start of the year.  In contrast, the trading environment across Mainland Europe and Ireland has been positive, which is reflected in the improved first half results from our non-UK businesses.

“Given the continuing challenging trading conditions in the UK, we have accelerated certain transformational workstreams and we now have increased visibility over delivery of significant profit improvement during the second half of 2018 and beyond.  

“As a result, we remain optimistic of delivering a full year result in line with our expectations absent any further deterioration in trading conditions, notably in the UK.  Whilst there remains considerable work to be done, we remain confident in our ability to deliver our transformational plans.”