SIG first-half revenue slips as tough markets linger

The London-listed company posted group revenue of £1.32bn, a like-for-like decrease of 6.8% compared to the same period last year.

It said the decline was driven by lower volumes in larger businesses and a drop in pricing, partly due to modest net input cost deflation.

Despite the revenue challenges, SIG managed to achieve an underlying operating profit of £11.7m, representing an operating margin of 0.9%.

The firm attributed that to effective cost management strategies that mitigated some of the impact of lower sales.

Net debt stood at £477m post-IFRS 16, with a slight increase from the previous half-year.

The company noted that revenue performance varied across regions, with the UK interiors, France and Germany experiencing significant challenges, while Poland and Ireland showed growth.

SIG's businesses in Germany and UK roofing continued to perform well relative to their respective markets, however.

Operating margins were affected by reduced volumes and pricing, but the company undertook further permanent cost restructuring actions, resulting in £15m in annualised savings since the second half of 2023.

SIG said it was continuing to focus on improving operational efficiency and executing strategic initiatives to drive better performance in the medium term.

Looking ahead, the company expected full-year 2024 underlying operating profit to be in the range of £20m to £30m, with a slightly stronger second half anticipated.

However, the extent of improvement would depend on demand conditions, particularly in France and Germany, where market uncertainties were persisting.

The board said it was still confident in achieving its medium-term operating margin target of 5%.

“Our results in the first half reflect the prolonged challenging market conditions we are currently facing across most of our European businesses,” said chief executive officer Gavin Slark.

“In light of these conditions, we took further actions to reduce our permanent cost base in the half, which will benefit us in the future.

“During the period, we also made further progress on our strategic initiatives to improve our underlying operations and to position us to capture additional growth when markets improve.”

Slark said that included the launch of a new omnichannel and e-commerce platform for its Germany business, with France to follow, both of which were expected to enhance future profitability as well as customer experience and convenience.

“Across all of our operations we are implementing a range of initiatives under our 'GEMS' strategy, which will lead to a higher-value sales mix and will support delivery of our 5% operating margin target.

“The operational gearing in our business model applies equally strongly in conditions of rising demand, and, accordingly, the board believes the group remains well positioned to benefit from the market recovery when it occurs.”

At 0939 BST, shares in SIG were down 1.79% at 22p.

Reporting by Josh White for Sharecast.com.