SIG sees full year in line with expectations after forex boost

European building products supplier SIG said 2017 like-for-like revenues were up 4%, in line with expectations.

It said group revenue from continuing operations for the year increased by 7.5% to £2.8bn, with currency contributing 3.8% to this growth and acquisitions 0.2%, offset by the effect of fewer working days at 0.5%.

“The improvement in confidence in mainland European markets continues to mitigate a weaker second half margin performance in the UK,” SIG said.

“As a result, returns on sales have remained stable and our overall expectations for underlying profitability for the full year remain unchanged.”

Like-for-like revenues were up by 2.1% in the UK & Ireland during 2017, with revenues of the group's UK insulation and interiors business continuing to benefit from industry price increases.

Construction markets across mainland Europe continued to show signs of improvement, SIG added, with like-for-like revenues up by 5.8%, underpinned by strong performances in France, Germany, Poland and Air Handling.

In December SIG sold its majority shareholding in its small Air Handling business in Turkey, ATC Turkey, and ceased the processing of insulation product at its Sitaco subsidiary in Poland.

SIG added that leverage reduction remained a “key medium term priority” and the group continued to focus on structural reductions in levels of working capital and sustained profit improvement.

It said it has identified an historical overstatement of cash and trade payables related to cash cut-off procedures associated with the issue of cheques around previous period ends.

While there was no impact from this on SIG's income statement, it resulted in an overstatement of cash of £20m at 31 December, 2016 and around £27m at 30 June 2017.

“If adjusted, this would have resulted in headline financial leverage of 2.3x at 31 December 2016 (reported 2.1x) and 1.9x at 30 June 2017 (reported 1.6x).”

“The group has initiated a rigorous review of controls around cheque issuance and will provide a further update at the time of its full year results.”

SIG also reported that non-executive director Janet Ashdown had taken over as chair of the remuneration committee, replacing Chris Geoghegan, who would continue to serve as the senior independent director of the group.