New SIG chief sees opportunities despite tough markets

THE new chief executive of SIG today said that he is “very positive” about the business as it announced results that showed a “resilient” performance last year.

Stuart Mitchell, who recently joined the Sheffield-based building products distributor after six years leading hardware and homewares chain Wilkinson, said that SIG expected construction markets to remain tough this year and so would focus on improving sales performance, margins and operational efficiency.

It saw flat sales last year but they dropped slightly to £2.6bn from £2.7bn when converted into sterling.

Underlying pre-tax profits were also flat at £84m while the gross margin in continuing operations rose 0.4% to 26.1% and the return on capital employed (ROCE) increased 0.7% to 8.6%.

The full year dividend is up by a third to 3p a share.

SIG operates across Europe and is a major operator in its core markets of insulation and energy management, interior fit out and roofing.

Mr Mitchell said: “SIG delivered a resilient performance in 2012, despite significant headwinds. We maintained profitability and met our key objective of increasing ROCE above the group’s weighted average cost of capital.

“My initial impressions of the business are very positive – SIG has a strong management team, leading positions in its markets and a clear strategy to take the business forward.  While this provides a firm foundation on which to build, I believe there is further potential in the group, with opportunities to improve performance in areas such as procurement, ecommerce, supply chain logistics and rebranding. I am confident that we can drive significant improvements in ROCE, even in flat markets, with additional upside to come from eventual market recovery.

“Although sales per day in constant currency for the first two months were slightly down compared to prior year, poor weather and a strong January comparator make it difficult to discern underlying trading patterns.

“Our outlook for 2013 remains unchanged from our trading statement in January.  We expect construction markets to remain challenging and likely to decline at a similar rate to 2012.  Against this background, and building on recent performance, SIG expects to make further progress by continuing to focus on sales outperformance, gross margin enhancement and improved operational efficiency,” he added.

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