Change in temperature brings no joy for SIG
TEMPERATURES may have got warmer but trading conditions haven’t improved for Sheffield-based insulation group SIG.
In May the group, which is one of Europe’s largest suppliers of insulation, interiors, exteriors and specialist construction products, said that extremely cold weather conditions in the first quarter had reduced demand and created an “exceptionally” challenging trading environment.
A month on and trading hasn’t improved with volumes remaining subdued and pricing pressures and a move towards a more unfavourable product mix holding back performance.
As a result of the continuing difficult market conditions SIG now expects pre-tax profits for the financial year ended December 31, 2009 to be at the bottom end of current expectations. The current range is £63m to £99m.
SIG said that its UK interiors business is particularly affected by the downturn but European markets have not achieved the usual level of seasonal improvement in the last four weeks.
The firm said that it was continuing to run the business “tightly” with a focus on realigning the cost base to changing market circumstances.
Measures implemented at the time of the interim management statement brought the total annualised savings achieved since the commencement of the programme to £62m.
Additional measures have been implemented in the last four weeks and these are expected to deliver a further £8m of cost savings on an annualised basis. Further measures are set to follow.
The group, which raised £341m in a rights issue earlier this year, said that its balance sheet remained strong and that it was confident it would operate within its banking covenants throughout 2009.
