Sheffield-based SIG delivers strong half year performance during time of uncertainty

SIG revealed that its underlying and statutory gross profit increased by 24 per cent to £355.7m in the six months to June 30 2022. The company said that its two year strategy of investing for growth has driven sustainable structural improvements across its businesses

Commenting on the results, Steve Francis, the company's chief executive officer, said: "SIG is a structurally different business to two years ago - more specialist, more local, more productive, more flexible. Over this time, we have delivered above market performance and enabled a rapid return to robust profitability, along with a rhythm of steady progress. The first half of 2022 in particular saw significantly stronger growth than originally planned, which resulted in margin improvement across our operations.

"SIG today is resilient, flexible and sustainable: 80% of our products serve the insulation and building energy efficiency markets. We are by far the largest independent supplier in Europe of these products, which are needed now more than ever.

"Our strong market position, growth strategy and decentralised model will continue to enable us to navigate the pricing environment well and drive market share gains.

"In addition, our scale, diversification and resilience in uncertain markets mean that we are confident both in delivering the board's expectations for the year and in our growth path to 5% operating margin in the medium term."

SIG launched its "Return to Growth" strategy two years ago in response to a period of share loss and profit decline that pre-dated Covid.

The statement added: "We said that through investing in growing and empowering our decentralised model across our 436 branches, and focusing on availability, superior service, local proximity and specialist expertise, we would drive revenue growth, enhance margin mix and improve productivity to return to three per cent group operating margin in two to three years, with a longer term goal of five per cent."

Commenting on the trading outlook, the statement said: "The group has continued to improve its positions in its core markets, and the fundamentals of those markets remain attractive. The board believes that the current performance provides evidence that we have the right strategy and foundations in place to deliver sustainable and profitable growth into the future."

SIG said it benefited from the combination of high price volatility and solid overall demand in the first half of 2022, although both of these conditions varied, in some cases significantly, across the group's different geographic and product markets.

The statement added: "This backdrop has persisted into the second half of 2022 to date, with continued inflationary pressures and varying demand conditions. Mindful of the current macroeconomic uncertainties, we expect these market conditions to remain similar over the remainder of the year."

"Notwithstanding this uncertain market backdrop, the board remains confident in the full year performance, and in our growth path to five per cent operating margin in the medium term.

"We benefit from broad sector, product and geographic diversification, with our OpCos now benefitting from an increasing range of operational levers that are allowing the businesses to respond quickly and effectively to market conditions.

"We also expect to return to free cash flow generation for the full year, absent any material change to the trading environment, although we will remain committed to maintaining product availability and superior service."