Revenue decline for specialist building materials supplier

Sheffield-based SIG, which supplies specialist building materials to trade customers across Europe, said it has faced challenges in sustaining sales rates amidst slowing construction activity.

The listed business has issued a trading update for the year ended 31 December 2019.

It says it has reduced its operating costs during the year, with the previously announced disposals of its Air Handling division and Building Solutions business completing a transition to a “robust balance sheet”. 

But the Group saw a 6.1% decline in its like-for-like revenues over the year. Group revenues from continuing operations were 7.4% lower in the period, including an adverse 0.8% currency movement and a 0.5% impact from fewer working days.

SIG’s update adds: “The Group has been reporting an ongoing deterioration during the year in the level of construction activity in key markets and key indicators continue to point to further weakening, principally in the UK.

“The Group has also experienced some challenges in sustaining sales rates during a period of considerable and rapid organisational change. This deterioration in sales accelerated during December, with sales per working day in the month around a quarter lower than November.

“Management initiated several profit protection measures through the autumn to help offset the impact of the challenging market conditions.

“As a result, the Board now anticipates underlying profit before tax for the year ended 31 December 2019 of about £42m.

“The key challenge for the Group in 2020 is to deliver a return to top line growth.

“Management is taking a number of actions to address sales performance which, coupled with profit protection actions taken in recent months and the annualised benefit of the broader transformation, will leave the Group well placed to capitalise on any recovery in trading conditions.

“Further reductions in levels of working capital have helped the Group to reduce its net debt at 31 December 2019 to c. £162m (2018: £189m), with debt factoring also reduced to c. £26m at the year end (2018: £50m).”