Results show SIG is insulated from construction industry downturn

PUBLIC sector building projects and environmental building regulations have helped insulation firm SIG boost sales despite a slow down in the construction industry.

The Sheffield-based firm, which is one of Europe’s leading suppliers of insulation, roofing, interiors and specialist construction products, said that group sales for the six months ended June 30 were £1.4m – an increase of 9.3% on the first half of 2007.

Like-for-like sales growth was achieved in all countries with the exception of Ireland, with sales of insulation and related products performing particularly well in the UK thanks to higher thermal performance standards required by new building regulations and the introduction of the Carbon Emissions Reduction Target (CERT) programme.

The group, which has completed 24 acquisitions in the first half resulting in the addition of 61 new trading sites, reported a slight fall in profit before tax from £56.1m for the same period 2007 to £55.7m.

Basic earnings per share was 29.2p – a drop of 5.8%. However, the like-for-like interim dividend increased to 8.3p from 8.0p.

Les Tench, SIG’s chairman, said that the results reflected a solid performance against a background of some challenging conditions.

“Around two thirds of the group’s sales are made into the non-residential building and industrial (non-construction) sectors, which include both public and private long-term projects,” he said.

“Demand from these sectors has remained robust in all countries in which SIG trades and has helped offset reduced construction activity in residential markets.”

Mr Tench said that SIG had been through periods of reduced demand in various markets many times in the past and that its exposure to a broad range of market sectors, countries and proven management expertise meant that it remained confident of further progress.

The group believes that despite a decline in new housing and consumer spending that construction activity in the public sector, especially works related to hospitals, schools and infrastructure, will continue to be strong with leading contractors reporting solid order books through 2008 and 2009.

However, it said that it was “mindful” of the likelihood that trading in some of its markets could become still more challenging over the coming months and that its approach to acquistions would be “cautious and highly selective”.