SIG reduces pre-tax losses to £51m in year of “challenge and change”
Sheffield-based SIG, a supplier of specialist building products in Europe, has today published its annual results, which show the business made pre-tax losses of £51m during 2017; an improvement on the £110m pre-tax losses reported in 2016.
During the financial year to 31 December 2017, SIG had revenues of £2.8bn. The firm said its underlying operating cost base, excluding the benefits of property profits, increased by £51.2m to £655.9m in 2017 (2016: £604.7m), due to a foreign exchange translation cost of £23.6m, the full year impact of additional costs from 2016 acquisitions of £3.2m, and other cost increases of £24.4m.
As a result, operating costs, excluding property profits, as a percentage of sales increased from 23.4% in 2016 to 23.6% in 2017. Costs peaked in the first half of 2017 at 23.9% of sales.
The LFL sales growth and the favourable impact from the foreign exchange translation of improved European profitability were partially offset by lower gross margins and higher costs.
SIG’s underlying net finance costs increased by £1.3m to £15.1m (2016: £13.8m), mainly due to higher average borrowings during the year, which offset some of the increase in operating profit, resulting in underlying profit before tax increasing 4.3% to £79.2m (2016: £75.9m). Excluding underlying property profits, underlying profit before tax declined 9.8% to £65.5m (2016: £72.6m). On a statutory basis, the Group made a loss before tax of £51.2m (2016: £110.0m) after non-underlying items of £130.4m (2016: £185.9m).
Meinie Oldersma, chief executive, said: “In a year of challenge and change for SIG, I am pleased to be reporting results for 2017 in line with expectations, delivering the first improvement in underlying operating profit for three years, including the benefit of property profits.
“We have achieved much this year, beginning to stabilise the business, returning SIG Distribution to underlying profitability and rationalising the loss-making UK Offsite Construction division. We have begun to get a grip on operating costs and working capital and we have made significant steps in refocusing the portfolio, exiting from eleven businesses, as we continue to strengthen our balance sheet.
“As the Group moves into 2018, we are seeing increasingly confident markets across Mainland Europe and Ireland, but also the first signs of capacity and labour constraint in buoyant construction markets. In contrast, we are seeing an increasingly challenging environment in the UK created by macro uncertainty and recent events in the construction industry.
“Notwithstanding this outlook, we see considerable potential for a significant improvement in operational and underlying financial performance, with execution largely within management’s control, and we are working hard to ensure effective delivery.”
SIG also announced this morning that Chris Geoghegan, a non-executive director and senior independent director of the Company, has today retired from the Board.
Geoghegan’s third term, nine years in total, serving as a non-executive director of SIG, expires at the Company’s 2018 Annual General Meeting on 10 May.
