SIG PLC (LON:SHI) has said it remains confident it will see significant profit improvement in the second half of the year and deliver a result in line with its expectations, in spite of continuing challenging market conditions thanks to the benefits of its strategic review.
In a trading update covering the period from 1 July to 31 October 2018, the FTSE 250-listed insulation specialist said group revenues from continuing operations decreased by 2.3%, while group like-for-like revenues were 3.6% lower.
READ: SIG sees first-half profits drop after builders delayed projects because of Britain’s long icy winter
The company said UK construction environment weakened during the autumn, with commercial construction demand remaining dampened by macro-economic uncertainty, house price inflation slowing and secondary housing market transactions continuing to fall.
It added that this weaker trading environment impacted demand for SIG's products and was a key factor behind an 8.7% drop in like-for-like revenues in the UK and Ireland in the period.
SIG said trading conditions in construction markets across Mainland Europe have also softened since June, notably in France as anticipated, where like-for-like revenues were down by 1.6% during the period, and in Germany which saw a 2.1% decline.
In contrast, the firm added it continues to see robust demand and good top-line growth in Poland, Benelux and its Air Handling business.
The group pointed out: “While market conditions are challenging, the transformation of SIG's businesses progresses as planned.”
It said: “Whilst the planned withdrawal from unprofitable business has reduced revenue, improved management of pricing and customer profitability is increasing gross margins ahead of expectations.
“In addition operating costs are falling, with reductions in headcount delivered in the Period as anticipated and further planned reductions on track for completion by 31 December 2018.”