Losses plummet to £106m at construction supplier

Construction supplier SIG has reported massive losses of £106.3m after facing fierce competition, as it simultaneously announces a replacement for the group chief executive ousted last year.

In 2016, the company saw its last chief executive, Stuart Mitchell, leave with immediate effect after a profit warning signalled the third consecutive year of profit decline for the company.

Former Brammer Group chief executive Meinie Oldersma (pictured right) has now been appointed as group chief executive.

The announcement came as the company reported losses of £106.3m after £183.8m of non-underlying items, forcing the Sheffield-based insulation and roofing supplier into the red for the year to December 2016.

The company made £51.3m in pre-tax profits in 2015, but had warned that it would not be able to achieve this again.

Underlying profit before tax reached £77m, within revised expectations which were significantly down on the year before.

The company blamed the slowing of activity around the EU referendum and continuing poor sales and increased competition in domestic markets.

It said that a non-cash goodwill and intangible impairment charge of £100.4m in relation to the Group’s French specialist roofing business, Larivière (acquired by SIG in May 2007 for €297m), reflected a more cautious market forecasts and broader market uncertainty. 

It also made a £40.1m loss on the agreed sale of Carpet & Flooring and the agreed sale, subject to contract, of Drywall Qatar. restructuring costs also soared to £13.3m. 

However the company did report an 11.2% increase in revenues for the year, from £2.46bn in 2015 to £2.74bn last year.

Mel Ewell, chief executive, said: “We have delivered underlying PBT in line with our previously stated range, but we are disappointed with the overall financial performance of the Group in 2016.

“Although the Board believes that the Group’s strategic direction is correct, implementation has proved challenging. Accordingly, since November we have slowed or stopped a number of internal initiatives, which will allow our team to refocus on customers and sales growth in order to generate cash and improve ROCE. This will ensure that we build on SIG’s significant potential in 2017.

“Going forward, we will take all necessary steps to ensure the group’s balance sheet is able to withstand any near-term fluctuations in market demand.

“We have also announced today the appointment of Meinie Oldersma as our new group chief executive. Meinie brings over 30 years of distribution experience and a strong customer focus to SIG.

“Together with the recent arrival of Nick Maddock as chief financial officer this completes the recruitment of the executive team to take the business forward. In the meantime I remain fully committed to the business until Meinie is on board.

“Trading in the first two months of 2017 has been in line with the Board’s expectations, although markets remain competitive and we are experiencing some supplier price inflation. The longer term outlook in our core markets continues to offer considerable opportunity and SIG remains a good business with strong market positions which is capable of delivering much more.”