SIG faces European uncertainty

BUILDING products supplier SIG said it expects trading conditions to remain variable in 2015, with no signs of improvement in the French or German construction markets.

The Sheffield-based company said progress was likely to be weighted towards the second half of the year, and it believes economic uncertainty will continue in mainland Europe.

The group, which supplies insulation, exterior roofing and interior products, reported a 2.5 per cent increase in group revenue from continuing operations in 2014 to £2.6bn. It said it expected underlying pre-tax profit for 2014 to be slightly ahead of market estimates.

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On a like-for-like basis, group sales in 2014 increased by 3.7 per cent. The UK and Ireland performed strongly, recording a rise of 9.1 per cent. SIG said that trading in mainland Europe deteriorated during the year as economic conditions weakened and like-for-like sales decreased by 1.0 per cent.

SIG said it was continuing to make good progress on “self-help” measures to improve its performance. The company said it had achieved a net benefit of around £10m in 2014 from its strategic initiatives, which is well ahead of its original £1m to £5m target.

The statement added: “The group expects continued good growth in the UK and Ireland, driven by residential demand and increasing activity in the commercial sector; uncertainty to remain in mainland Europe, with no indication yet of any improvements in either the French or German construction markets; and further scope for self-help through market outperformance and the strategic initiatives.

“As a result of these factors, SIG is confident of achieving further progress in 2015, although strong H1 (first half) comparators mean that this is likely to be weighted towards the second half of the year.

SIG will announce its full-year results on March 12, 2015. In a note, analysts from Liberum said: “The full year trading update says that the group will make marginally more PBT (profit before tax) than £96.5m (consensus) in 2014. The outlook is mixed, with optimism for the UK, with continued strength in residential and the start of commercial recovery, offset by uncertainty in mainland Europe.”

SIG, founded in 1957, has grown from a single-site business to become one of Yorkshire’s biggest listed companies. The FTSE 250 group, which employs around 1,000 people in Sheffield, has made a number of acquisitions over the last two years, mostly in the roofing materials business.

It has been helped by growing demand for energy-efficient buildings. It supplies the pipework and fans used in ventilation systems for air conditioning and heating systems.

Over the last financial year, SIG acquired three UK businesses for a total of £5.2m. They included a controlling interest in a company called Coxbench, SIG’s joint venture partner in the development of Insulshell, a patented, super-insulated timber building system for use in the residential, commercial and retail sectors.

The deal enabled SIG to speed up Insulshell’s development and capitalise on its growth potential.

SIG made three further acquisitions in July last year in the UK roofing, French roofing and Dutch air handling markets, which took its total acquisition expenditure to £14.6m for the year to July 2014.