SIG in line with forecasts as Europe trading remains strong

Specialist building products distributor SIG updated the market on its trading in the six months to 30 June on Wednesday, which the board said was “in line” with expectations.

The FTSE 250 firm said group revenues from continuing operations increased 8.1% to £1.42bn, with currency contributing 0.5% to growth and acquisitions 5.3%, offset by fewer working days at 0.1%.

Like-for-like revenue growth showed a “marked improvement” on H2 2016, at 2.4% for the group during the period, compared to growth rates of 0.2% and 0.8% in the second and first halves of 2016 respectively.

In the UK and Ireland, like-for-like revenue growth was 0.7%, up from a 0.1% decline in the second half of 2016, led by Ireland, where like-for-like revenues were up 4.7%.

For the UK, like-for-like revenue grew 1.6% at SIGD, while it fell 0.3% at SIGE, 2.3% in the off site construction division, and 16.9% in other UK and Ireland activities.

Mainland Europe like-for-like revenue performed well, growing 4.2%, compared to 0.5% in the second-half of 2016.

That was led by the air handling division, where like-for-like revenue grew 12.2%, followed by 9.6% growth in Poland, 4.8% in France and 1.8% in Germany.

The Benelux region was a sore spot, with like-for-like revenue falling 4.8% during the period, having grown 2.2% in H2 2016.

“SIG recorded an improved performance in the UK as it successfully passed on increased supplier price inflation to customers,” the company’s board explained.

“In Mainland Europe LFLs increased 4.2% as the group continued to benefit from the recovery in construction markets, particularly in France.”

Leverage reduction remained a “key” near-term priority for SIG, the board added, explaining that the business was starting to respond to actions taken to strengthen the balance sheet, including asset disposals and tighter control over cash, working capital and capex.

As a result, the group now expected its net debt at 30 June to be lower than at 31 December 2016, when it stood at £259.9m.

“This improved level of net debt should result in a lower seasonal peak in half year leverage and facilitate a reduction in leverage in the second half of 2017, towards the target range of 1.0 - 1.5x in 2018.

“As previously stated, given that the group's 2016 results were weighted towards the first half of the year, SIG expects its H1 2017 performance to be lower than that achieved in H1 2016 and comparable with H2 2016.”

For the full 2017 year, the board said it expected the business to show a stronger second half.

“Key risks to the full year include the increased political and macro uncertainty in the UK, potentially mitigated by continuing improvement in confidence in European markets.”

SIG said it would announce its half year results on 8 August.