SIG PLC (LON:SHI) has reported a drop in first-half profits as builders delayed projects because of Britain’s long icy winter although trading across Mainland Europe and Ireland was positive and the firm is confident for its full-year outcome.
The FTSE 250-listed construction materials supplier saw its underlying pre-tax profit drop by 21.8% to £26.9mln in the six months to 30 June, down from £34.4mln a year earlier which included one-off property profits.
READ: SIG reports first profit improvement in three years as Europe recovers, but UK still challenging
The company reported underlying revenue growth of 1.0% in the first half, with like-for-like sales growth slowing to 0.4%, down from 2.9% a year earlier, reflecting challenges in the UK market.
However, the firm highlighted further progress on strengthening its balance sheet, with net debt down 18.8% over the period to £176.1mln, and its portfolio re-focus, with operating costs under control and working capital beginning to fall.
Meinie Oldersma, SIG’s chief executive officer, commented: "Ten months into our transformation of SIG, progress is well underway and we are starting to see evidence of delivery.”
He added: “Given the continuing challenging trading conditions in the UK, we have accelerated certain transformational workstreams and we now have increased visibility over delivery of significant profit improvement during the second half of 2018 and beyond.
“As a result, we remain optimistic of delivering a full year result in line with our expectations absent any further deterioration in trading conditions, notably in the UK. Whilst there remains considerable work to be done, we remain confident in our ability to deliver our transformational plans."
The firm is paying an interim dividend of 1.25p per share, unchanged from a year earlier, in line with its 2-3 times cover policy.
Shares easier, Liberum keeps 'buy'
In early morning trading, SIG shares edged 0.7% lower to 120.3p.
In a note to clients, analysts at Liberum Capital commented: “SIG’s H1 results are mixed, but the underlying message is that management is confident in its guidance as cost-saving measures bear fruit in the second half. H1 PBT fell 7%, but this was broadly as expected, as UK profits fell in a tough first half.
“However, accelerating cost-saving measures gives management confidence that guidance for 2018 is still achievable.”
Liberum reiterated a ‘buy’ rating and 157p price target on SIG shares.
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