Challenging conditions dent 1H profit for SIG

Underlying operating profits came in at £32.7m in the six months ended June 30, down from £42.5m the year before.

SIG, which supplies specialist insulation and other building products across Europe, warned back in July that profits would be at the lower end of expectations due to “challenging and variable” market conditions, with softer demand for new-build construction projects in Germany and France towards the end of the first half.

Revenues during the period were £1.42bn, a slight increase on £1.36bn the year before, but the underlying operating margin dropped from 3.1% to 2.3%.

Nevertheless, chief executive Gavin Slark said he remained confident in the company’s medium-term margin target of 5%.

"Looking ahead, while we expect market conditions in the second half to remain difficult, we remain confident the business will grasp the opportunities it has to continue to improve its underlying operational performance,” he said.

SIG said the second half of the year is expected to benefit from various productivity initiatives and full-year underlying operating profits are still poised to be in line with recently revised guidance.

In July, the company stated that full-year underlying operating profits would come in at the lower end of analysts’ expectations, which at the time ranged from £65.3m to £84m. In 2022, underlying operating profits were £80.2m.

Looking ahead, SIG said an expected increase in demand for sustainable construction projects and the decarbonisation of buildings should help the company over the medium term, “with 80% of the group's sales covering insulation and the wider building envelope”.

Shares in SIG were up 1.4% at 28.95p as of 1002 BST on Tuesday. The stock has come down significantly after reaching a high of 45.38p back in early May.