SIG on track as its markets remain mixed

Specialist building products supplier SIG updated the market on its trading on Thursday morning, maintaining its expectations for the year, as investors gathered in Sheffield for the company’s annual general meeting.

The FTSE 250 firm said group revenues from continuing operations for the January-to-April period increased by 2.2%, with currency contributing 2.0% to growth and working days 0.5%.

Like-for-like revenues were reportedly down 4.4% in the UK and Ireland, with a “significant” adverse impact from poor weather conditions in the region during February and March.

The exteriors business further suffered from weak market conditions in UK commercial new build and RMI markets, as the board had previously indicated.

SIG’s businesses across Mainland Europe continued to perform well, the board said, with like-for-like revenues up by 3.8% during the period.

Whilst construction activity in France had been affected by the recent increase in industrial action, and like-for-like sales in the group's air handling business were dependent on the phasing of project revenues during the year, growth remained strong across Germany, the Benelux and particularly Poland.

“Leverage reduction remains a key medium term priority and the Group continues to focus on structural reductions in levels of working capital and sustained profit improvement to drive leverage lower,” the board explained in its statement.

“Seasonal fluctuations mean that debt and leverage are likely to remain similar to year end levels in the first half, but the group remains on course to deliver leverage in a 1.0 - 1.5x range during 2018, with the group continuing to target leverage below 1.0x over the medium term.”

SIG said trading conditions remained mixed across its markets, with continued confidence across Mainland Europe and Ireland but ongoing challenges in parts of the UK construction sector.

“We continue to progress our plans to deliver a significant improvement in our operational and underlying financial performance, as well as focusing the portfolio and reducing leverage. We expect a stronger second half to the year, reflecting both normal seasonality and the benefit of ongoing cost and margin actions coming through in H2.

“Providing there is no further deterioration in UK market conditions, our expectations for underlying profitability for the full year remain unchanged.”