logo-loader

SIG shares under pressure as it warns of 'marked deterioration' in construction activity

Published: 08:50 06 Sep 2019 BST

SIG PLC -

SIG PLC (LON:SHI) shares slid after the building materials supplier reported a 5.1% decline in first-half revenue and warned of a “marked deterioration” in construction activity.

The company said underlying revenue fell to £1.26bn in the six months to the end June from £1.33bn a year ago, blaming political and macro-economic uncertainty in the UK and Ireland, and “to a lesser extent”, Germany.

On a like-for-like basis, sales dropped 3.8% compared to last year’s 0.1% dip.

Statutory pre-tax profit slumped to £5.2mln from £19.6mln, hit by the adoption of IFRS 16 accounting measures and £22.1mln in exceptional items including restructuring costs and losses on the sale or closure of non-core businesses.

Excluding items and IFRS 16, underlying pre-tax profit rose 19.5% to £30.0mln, supported by cost savings delivered by the overhaul of the business.

The gross margin improved by 70 basis points (bps) to 27.1%.

 Net debt fell to £158.2mln from £176.1mln. SIG said the combination of higher profit and lower debt delivered a 250bps increase in return on capital employed to 11.5% from 9.0% last year.

The group added that it remains on track to meet its medium-term targets including a return to like-for-like sales growth, a 15% return on capital employed and retaining its market share.

“We continue to see benefits from transformational initiatives across the group's businesses,” said chief executive Meinie Oldersma.

“Coupled with the group's normal seasonality, these are expected to deliver further upside in the second half of the year. 

However, he added that political and macro-economic uncertainty continues to increase as the company enters the traditionally strongest trading months of the year. 

Oldersma said there has been a marked deterioration in the level of construction activity in the UK as the year has progressed and a number of key indicators are pointing to further weakening of the macro-economic backdrop, notably in Britain and in Germany.

“We continue to monitor trading conditions closely and we are taking actions in anticipation of further market weakness."

Shares fell 5.2% to 122.3p in morning trading. 

Caledonia Mining tackles 2023 challenges with optimism for 2024 as it...

Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) chief executive Mark Learmonth tells Proactive's Stephen Gunnion the company faced a challenging 2023, primarily due to poor production in the first half of the year at its core asset, the Blanket Mine in Zimbabwe, and an underperformance...

1 hour, 30 minutes ago