Bad weather forces SIG to launch cost-cutting

However, an analyst described SIG’s performance as “resilient” during a period when the UK economy dipped back into recession.

Chris Davies, the company’s chief executive, said it had achieved a “very decent” performance as it faced “extraordinarily strong headwinds” in the first part of the year.

He added: “The cold and wet had an inevitable impact on the outside building trade.”

However, he hoped to see “a little bit of growth” in the housing and commercial property market next year.

He added: “We would expect to see new house building in the UK continue to show gradual improvement.”

The Sheffield-based company, which also supplies insulation products, reported a 1.9 per cent drop in underlying interim pre-tax profits to £34.7m.

SIG said it had earmarked another £7m in savings in 2013 as part of “self-help” measures.

It plans to make cuts across its branch network, but aims to reduce costs through efficiencies rather than job losses.

The group saw UK and Ireland sales fall 1.9 per cent in constant currency in the six months to June 30 as the dismal weather from April to July hit outside building trades.

SIG’s exteriors division, which supplies roofing materials to industrial and agricultural sectors, was affected by the heavy rain- fall.

Its Irish business suffered in the half-year, with sales down 14.8 per cent in constant currency due to wider economic and construction troubles.

A better performance in Europe helped offset some of its domestic difficulties, with sales across mainland Europe up 1.7 per cent in constant currency, thanks to a robust performance in France and the Benelux countries.

Mr Davies highlighted the fact that SIG’s operations were concentrated in the growing parts of Europe’s economy.

SIG trades from around 710 locations across Europe and employs 10,600 people across the continent.

Mr Davies said the group had steadied sales in the second half so far, with like-for-like revenues in line with a year earlier following falls in May and June.

He added there had been “little discernible effect” from the Olympics on its UK business.

He added: “There are some grounds for hoping that we’ll see the present double dip recession in the UK easing out as we get towards the end of this year.

“Hopefully, we’ll start to see a little bit of growth in the positive direction in the UK and in some of our major countries in 2013.

“But it won’t be spectacu- lar.”

Andy Brown, an analyst at Panmure Gordon, noted a “stabilisation in trading and clear strategy” as positives for SIG and said the half-year was a “resilient performance” against strong head- winds.

Goodbody analyst Robert Eason, who has a ‘buy’ rating on the stock, said the results were in line with his expectations and that it was encouraging that the company forecasted flat second-half sales, rather than falling sales, given the poor macro environ- ment.

“We’ll be definitely buyers after this set of results,” he said.

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