SIG PLC Half Year Trading Update (5684E)
05 July 2019 - 4:00PM
UK Regulatory
TIDMSHI
RNS Number : 5684E
SIG PLC
05 July 2019
5 July 2019
SIG plc: Half Year Trading Update
Further transformation progress in challenging trading
environment
SIG plc ("SIG" or "the Group") is a leading supplier of
specialist building materials to trade customers across Europe,
with strong positions in its core markets as a specialist
distributor of insulation and interiors products, a merchant of
roofing and exteriors products, and a provider of air handling
solutions. The Group today issues a trading update for the six
months ended 30 June 2019 ("the period").
Summary and outlook
The Group has made further progress during the period in
transforming the business. The previously reported actions in our
UK businesses around pricing, costs and the transition to a more
integrated functional operating model are delivering a sustained
improvement in margins, and we continue to pursue similar
initiatives in our operations across Mainland Europe.
Trading conditions remain challenging in many of the Group's end
markets and there has been a marked deterioration in the level of
construction activity in the UK as the year has progressed.
However, the continuing transformation of the Group's businesses,
coupled with the Group's normal seasonality, should enable delivery
of a stronger second half to the year. As such, the Board continues
to believe that underlying profitability for the full year will be
delivered in line with its expectations, but will continue to
monitor how trading conditions develop.
Operating performance
The Group saw a 3.8% decline in its like-for-like(1) ("LFL")
revenues over the period. Group revenues from continuing operations
were 5.7% lower in the period, including an adverse 1.3% currency
movement and a 0.6% impact from fewer working days.
Like-for-like sales H1 2019 H2 2018 H1 2018
growth
SIG Distribution (17.0%) (8.7%) (3.2%)
SIG Exteriors (6.3%) (6.6%) (6.6%)
Ireland & Other UK (6.3%) (8.9%) +8.5%
UK & Ireland (12.7%) (8.0%) (3.4%)
--------------------- -------- -------- --------
France +3.3% (3.9%) (0.3%)
Germany +0.1% (4.4%) +1.1%
Poland +6.3% +6.7% +10.7%
Air Handling +7.7% +0.8% (2.7%)
Benelux (1.3%) +5.4% +6.0%
--------------------- -------- -------- --------
Mainland Europe +3.3% (1.4%) +1.0%
--------------------- -------- -------- --------
Group (3.8%) (4.3%) (1.0%)
--------------------- -------- -------- --------
1: Like-for-like is defined as sales per day in constant
currency excluding acquisitions and disposals and adjusted for the
number of working days. Sales are not adjusted for branch closures
or openings.
The LFL sales declines in the UK & Ireland reflect a falling
level of construction activity as the second quarter progressed.
Revenues at SIG Distribution have also been affected, as
anticipated, by the radical actions taken to focus on better
pricing management and a planned withdrawal from unprofitable
business, as previously reported. The business has now completed
its transition to a smaller and more focused base, with resulting
higher gross margins and lower costs.
The Group's businesses in Mainland Europe reported a positive
performance in the period, with LFL revenues up +3.3%. The French
business has recovered strongly to +3.3% following the previously
reported ransomware attack. Core systems are now fully operational,
with no ongoing impact anticipated, enabling the business to
recommence key initiatives around pricing and costs.
The Air Handling division continues to report strong LFL revenue
growth (+7.7%), with good progress in integrating the French and UK
air handling operations into the broader division, and ongoing
initiatives around margin and costs that will deliver significant
profit improvement.
Leverage and portfolio management
The Group continues to prioritise structural reductions in the
level of its working capital and sustained profit improvement to
drive headline financial leverage lower. Net debt has fallen
further in the period and the Group expects this to result in
further progress in headline financial leverage at 30 June
2019.
Management continues its review of remaining peripheral
businesses within the Group's portfolio and today announces the
sale to Kingspan Group of WeGo FloorTec GmbH, a German manufacturer
of raised access flooring. The business contributed c.GBP2m
operating profit in Germany in 2018. The transaction is expected to
complete shortly and the resulting proceeds of c.GBP12m should
reduce headline financial leverage by a further c.0.1x. There
remains one further peripheral business under review.
After two years of sustained debt reduction, the Group remains
on course to deliver its medium term target of headline financial
leverage below 1.0x. The review of strategic options for the Air
Handling division announced in March is ongoing, with a disposal
being explored as one of the possible options. A further update
will be provided in due course.
The Group will announce its interim results for the half year
ended 30 June 2019 on Friday 6 September 2019.
Enquiries
SIG plc
Meinie Oldersma, Chief Executive
Officer +44 (0) 114 285 6300
Nick Maddock, Chief Financial Officer +44 (0) 114 285 6300
Katharine Baxter, Group Communications +44 (0) 114 285 6300
FTI Consulting
Richard Mountain / Susanne Yule +44 (0) 20 3727 1340
Jefferies Hoare Govett
Ed Matthews / Will Soutar +44 (0) 20 7029 8000
Peel Hunt LLP
Nick How / Charles Batten +44 (0) 20 7418 8900
Cautionary Statement
This Trading Statement is prepared for and addressed only to the
Company's shareholders as a whole and to no other person. The
Company, its directors, employees, agents or advisors do not accept
or assume responsibility to any other person to whom this Trading
Statement is shown or into whose hands it may come and any such
responsibility or liability is expressly disclaimed.
Certain information included in this Trading Statement is
forward looking and involves risks and uncertainties that could
cause the actual results to differ materially from those expressed
or implied by forward looking statements. It is believed that the
expectations set out in these forward looking statements are
reasonable but they may be affected by a wide range of variables
which could cause future outcomes to differ from those foreseen in
forward looking statements, including but not limited to, changes
in risks associated with the level of market demand, product
availability and pricing, competitor risk, credit risk, credit
insurance, restructuring of SIG and exchange rates. More
information about the risks and uncertainties that may affect the
Group's performance is contained in the Annual Report to
Shareholders for the year ended 31 December 2018. All statements in
this release are based upon information known to the Company at the
date of this Trading Statement. The Company undertakes no
obligation to publicly update or revise any forward looking
statement, whether as a result of new information, future events or
otherwise.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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