SIG's first half results boosted by acquisitions and weak pound

SIG reported on Tuesday a 20% increase in first half underlying profit before tax as group sales were boosted by acquisitions and foreign exchange benefits.

The London-listed supplier of insulation, roofing, commercial interiors said pre-tax profit came to £47.7m in the six months ended 30 June, up from £39.8m in the corresponding period a year ago.

Revenue gained 11% to £1.37bn with acquisitions contributing 4.6% to growth. Group like-for-like sales grew 0.7%.

During the period, the company made “good progress” on its Strategic Initiatives programme to improve its business performance. The strategy delivered an incremental net benefit after costs of £5.7m in the first half, mainly sourced from procurement.

While the Strategic Initiatives added 40 basis points to SIG's gross margin in the first half, it was offset by a competitive market environment, weak trading conditions in Mainland Europe and changes to product mix. The group's gross margin was broadly flat at 27.0%.

Sales increased 12.7% to £636.3m in Mainland Europe thanks to a stronger euro against the pound, although like-for-like sales dropped 1.25% due to variable trading conditions.

In the UK and in Ireland, revenues from continuing operations increased 8.8% to £738.9m and like-for-like sales climbed 2.3%, supported by acquisitions.

"With regard to the EU referendum, we observed a slowing of UK construction market activity immediately prior to and following the vote. As a result our like-for-like sales in the UK were flat in June and July, although there was some improvement in trading as July progressed,” said chief executive Stuart Mitchell.

"Clearly the uncertainties caused by the referendum have made it more difficult for us to assess the trading outlook, particularly in the near-term, and we are therefore closely monitoring market developments in order to address any variances that arise.

"That being said, based on our current experience, we continue to expect to make progress this year as the group benefits from the Strategic Initiatives, acquisitions and value added sales, together with foreign exchange translation on its earnings in Mainland Europe."

The company raised its dividend by 8.3% to 1.83p.