Shares in insulation giant SIG plunged over 20 per cent this morning after the group warned that deteriorating conditions in mainland Europe, particularly in France, will hit annual profits.
The Sheffield-based group said it now expects full year underlying pre-tax profit to be between £85m and £90m, down from £98m last year.
While the UK market has held up, profits have been dragged down by weak euro zone countries.
Group like-for-like sales rose 0.2 per cent in the nine months to September 30, with the UK & Ireland ahead by 2.0 per cent and mainland Europe down by 1.7 per cent.
European trading deteriorated over the summer and in the three months to September 30, group like-for-like sales fell 0.9 per cent, with the UK & Ireland up 0.4 per cent and mainland Europe down 2.3 per cent.
At its half year results in August, SIG said it expected to make year-on-year progress assuming the improving sales trend in mainland Europe continued.
This morning it said the trend did not continue with market conditions deteriorating in the second half, particularly in France. This was most notable in September, although October remained difficult. SIG said it had also been hit by a lower than anticipated level of demand in the UK repair, maintenance and improvement market.
SIG said the challenging market conditions have hit gross margin, which is now expected to be flat year-on-year, with procurement savings being offset by competitive pressures and adverse volume effects.
Despite this the group said it is encouraged by opportunities to improve efficiency over the medium-term, particularly in supply chain and procurement.
SIG said it will accelerate its supply chain review in response to the market downturn and it expects to make savings of at least £20m.
It said this will be in addition to efficiencies being delivered by the group’s procurement initiative.
It said a detailed update will be given at the group’s Capital Markets Day on November 16.