Building product specialist SIG lamented a “disappointing” year of trading despite am 11.2 per cent increase in sales.
The Sheffield-based distributor reported sales of £2.74m for the year ended December 31, an increase of just 0.3 per cent on a like for like basis.
The trading update is issued as SIG is undergoing an extensive transformation programme as a business, something its chief executive admitted was distracting its focus away from servicing its customers.
Mel Ewell, chief executive, said: “2016 was a disappointing year for SIG.
“While the competitive environment, particularly in the UK, was challenging, our transformational change programme, although taking the Group in the right strategic direction, distracted us somewhat from our customers.
“Going forward we need to better balance business change with the day-to-day operations of the Group. Our principal aims for 2017 are therefore to restore our customer focus, place an increased emphasis on sales growth, and reduce leverage.
“Going forward the Group will prioritise leverage reduction by more tightly focusing on its cash generation, moderating capital expenditure and suspending its infill acquisition programme.”
Shares in the company rose by more than 10 per cent following the update, with investors clearly pleased that the update was not a profit warning. It will publish its full year results on March 17.
The trading update said the business was benefiting from foreign exchange movements, acquisitions and working days.
It said: “In line with previous guidance the group continues to expect that underlying profit before tax for 2016 will be within its previously stated £75m to £80m range, and that gross margin will be around 30bps lower than prior year.”
In the UK and Ireland like for like sales in the year increased 1.1 per cent, with SIG Distribution up 1.2 per cent and SIG Exteriors down 1.5 per cent.
However in mainland Europe sales declined 0.5 per cent, with France and Germany down 2 per cent and 1.3 per cent respectively.
Adrian Kearsey, equity research analyst for Panmure Gordon & Co, said: “SIG endured a tough 2016, with Europe remaining underwater and the UK lurching downward in the earlier part of the second half.
“The valuation highlights that many investors anticipate the position in the UK is unlikely to reverse anytime soon. However, the new chief executive is reducing emphasis on change management and ensuring frontline resource is more focused on selling. Early indications are encouraging with UK LFL up 2.5 per cent year on year in November-December, though we recognise the turnaround may take time.
“The pre-close does not signal a turnaround in the business. But there are no further shocks and the back-to-basics approach being adopted should (in-time) yield positive results.”
Construction has been the worst hit sector by Brexit with many of the nation’s leading firms seeing the share price plummet after the vote.