SIG 'disappointed' with results, hires new CEO

Specialist building products distributor SIG posted its results for the 2016 calendar year on Tuesday - at the same time confirming Meinie Oldersma as its new group chief executive.

The FTSE 250 firm said revenue rose 11.2% during the year to £2.74bn, though that increase was only 4.4% when measured using constant currencies.

Underlying operating profit was down 8.6% to £91.3m, or down 14.9% at constant currencies, while underlying profit before tax fell 12.5% to £77.5m, or 19% at constant exchange rates.

SIG’s underlying basic earnings per share were 1.6p lower at 9.7p.

The board said cash inflow from trading during the year was broadly in line with 2015, falling 0.9% to £98.9m from £99.8m.

Return on capital employed, post-tax, was 9.4% - falling from 11.5% in 2015.

“We have delivered underlying profit before tax in line with our previously stated range, but we are disappointed with the overall financial performance of the group in 2016,” said interim chief executive Mel Ewell.

“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.”

Ewell said such a strategy would ensure that the board builds on SIG's “significant potential” in 2017.

“One consequence of our 2016 profit is that leverage is now higher than our targeted 1.0x - 1.5x range.

“Leverage reduction is a key short-term priority and we have already identified a number of actions to strengthen the balance sheet, including the rebasing of our dividend.”

Going forward, SIG’s board would take all necessary steps to ensure the group's balance sheet was able to withstand any near-term fluctuations in market demand, Ewell explained

“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.”

In a separate announcement on Tuesday, SIG’s board confirmed that Meinie Oldersma had agreed to join SIG as its group chief executive from April, with Mel Ewell reverting back to being a non-executive director of the company.

“I am pleased to announce the appointment of Meinie, who will bring his considerable and relevant experience to SIG,” said SIG chairman Leslie Van de Walle.

“Meinie brings over 30 years of distribution experience and a strong customer focus to SIG.”

Van de Walle said Oldersma had lived and worked in a number of locations throughout Europe and driven successful transformations of complexity and scale in a variety of organisations.

“He has a track record of driving sales, as well as turning around and growing businesses.

“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.”

Oldersman was joining the group from Brammer, where he was currently group chief executive.

Prior to Brammer, he was CEO at 20:20 Mobile Group and president of Ingram Micro China Group.

Oldersma remained non-executive chairman of Kondor and non-executive director of Smallsteps, and had previously been a non-executive director at Bunzl and Metra Computer Group.