Glimmer of hope for insulation specialist SIG

INSULATION specialist SIG still remains under pressure but is witnessing “small consistent” improvements in some sectors.

The Sheffield-based group, said today that the overall trading environment for the period July 1 to November 11 had remained “very testing” after a difficult first half.

However, although volumes continued to fall in the majority of countries and sectors in which SIG operates it said there were early signs of a slowing rate of decline in some markets.

Residential has seen a small improvement in demand from the new build sector while the exteriors division, which is the part of SIG’s UK operations most exposed to residential construction, has experienced a slight gradual improvement in the last three months.

The recession however is still continuing to affect the group’s interiors distribution and manufacturing activities and specilaist construction products division, which has seen a further erosion in turnover.

Despite the 20% uplift to the current CERT (Carbon Emissions Reduction Target) scheme approved in July and the further one year planned extension to 2012 of the existing arrangement, Miller Pattison, which installs retrofit insulation in homes, has so far seen little evidence of a release of additional funding from the energy providing utilities and consequently the autumn sales trend has been subdued.

SIG said that sales had broadly been in line with management expectations in the second half of 2009 with like-for-like turnover 16.5% lower year to date and around 15% lower since the end of June.

Gross margins in Europe remained broadly consistent with first half levels although SIG said there had been some slippage in recent weeks in some countriesmainly due to product mix.

As in the UK and Ireland, all of SIG’s European businesses continue to take actions to protect and where possible improve gross margins, while maintaining market position.

While there are some risks to trading volumes for the remainder of the year, SIG anticipates that underlying profit before tax will be in line with current market expectations.

It said it was continuing with its cost saving programme, which has seen £92m in savings achieved with 141 branch closures and around 2,600 redundancies.

Progress on restructuring measures announced in August has been good and included the reconfiguration of its interiors manufacturing division, the merger of the UK roofing and roofline ruilding plastics divisions (exteriors), and the merger of SIG insulations and CPD (interiors distribution) to create SIG Distribution.

All restructuring programmes are on schedule to deliver the planned efficiencies and cost savings while protecting and enhancing customer service.

SIG said in a statement: “SIG’s position as Europe’s leading distributor of insulation coupled with its operational expertise and track record means it is exceptionally well placed to take advantage of the long term demand drivers for energy efficiency and carbon reduction solutions throughout all regions in which it trades and to pursue at the appropriate time other organic growth opportunities.