Listed building materials supplier reports revenue dip in ‘challenging market conditions’
SIG, which supplies specialist building materials to trade customers across Europe, reported that group revenues from continuing operations has decreased by 1.4%.
The Sheffield-based company is a specialist distributor of insulation and interiors products, a merchant of roofing and exteriors products and a provider of air handling solutions.
In a trading update for the year ending 31 December, SIG said group like-for-like (LFL) revenues were 2.3% lower and expects to report a pre-tax profit of £75m in ‘challenging market conditions.’
The group also said that it anticipates to achieve £2-3m of property profits in this period, which will assist with the ongoing transformation to drive a further significant increase in profitability in 2019.
SIG claimed these results were due to the UK’s weaker construction environment, as “commercial construction demand remained dampened by macro-economic uncertainty, house price inflation slowed and secondary housing market transactions continued to fall.”
These factors impacted SIG’s products are behind the lower LFL revenues in the UK and Ireland, down 8.8% in the second half.
During this period, the group also reported that revenues at SIG Distribution continued to reflect the focus on improving profitability, which has delivered higher gross margins at the expense of lower revenue.
Trading conditions in construction markets across Mainland Europe also slowed materially in the second half, particularly in France and Germany, where LFL revenues were down by 3.2% and 4.6% respectively. In contrast, the SIG currently continues to see strong demand and good top-line growth in Poland, Air Handling and Benelux.
The group has delivered significant improvement in its operational and financial performance during the second half of 2018.
SIG said that the “focus on better pricing management and the planned withdrawal from unprofitable business” has reduced revenue in the second half of 2018, but increased gross margins above the group’s expectations. Falling headcount has also contributed to reduced operating costs as planned.
As part of the ongoing management of the group’s portfolio, during December SIG sold its shareholding in its remaining UK offsite manufacturing business, RoofSpace, and the trade and assets of Proteus, a small UK-based façade panel systems manufacturing business.
SIG will announce its full year results on Friday 8 March.
