SIG to beat forecasts despite sales fall

CONSTRUCTION products supplier SIG today forecast underlying pre-tax profits in the first half of the year will be ahead of expectations despite lower sales figures than last year.

The Sheffield-based firm said that monthly sales were now levelling out after disruption caused by the bad weather in the UK and mainland Europe at the start of the year but in the six months to the end of June overall sales were down 4%.

However, monthly sales in the company’s main distribution and merchanting business, which accounts for 88% of group sales, were reported to be slightly ahead of the same period in 2009.

In a trading update, SIG’s management said it remained cautious about its prospects for the second half of the year amid continued uncertainty over the economic outlook.

The statement said: “Against this background, management is continuing to drive through the operational benefits of the major restructuring changes made over the last two years, protecting its strong market positions and gross margins, and making further cost savings where appropriate.
 
“In the medium term, the group is well positioned to benefit from increasing demand for insulation, driven by higher regulatory standards as well as from other schemes offering incentives and subsidies in the field of energy conservation, renewable energy and sustainable construction.”

In the UK, SIG’s sales were down 4.9% compared to 2009 although by the end of the first half sales rates had almost return to the level of the previous year. The biggest improvement was in roofing, where the company is most exposed to the residential construction sector, echoing improvement seen in recent results from housebuilders.

Debts in the company fell from around £255m to £227m in the first half year.