SIG’s first half profit rises

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BUILDING materials supplier SIG reported a 23.5 percent rise in half-year underlying pre-tax profit, helped by a robust improvement in the UK residential construction market and a mild winter.

Shares in the Sheffield-based company rose in early trade today.

The company, which operates in the UK and mainland Europe, said conditions in mainland Europe remained variable with the French construction market expected to weaken further in the second half.

Jefferies lowered its estimates for SIG’s European business citing a strengthening pound and a challenging French residential market, and reduced their target price on the stock to 200 pence from 220 pence.

“Encouragingly, the group continues to outperform the market in France, benefiting from its maturing branch portfolio and a shift towards specialist distributors,” Jefferies said in a note.

In mainland Europe, SIG’s biggest market is France, followed by Germany, Benelux, Poland and Ireland. The company said its underlying gross margin in the first half increased 40 bps to 26.8 per cent, driven by savings derived from a programme launched late last year.

Underlying pretax profit from continuing operations rose to £41.5m for the six months ended June 30, compared with £33.6m a year earlier. Revenue rose 6.5 per cent to £1.3bn.

SIG said it would pay an interim dividend of 1.42 pence per share, up from 1.15 pence last year.