SIG outlook fails to halt dividend

The Sheffield-based group lifted sales by 10% and underlying profits by 64% to £35.4 million in the half year to June, prompting its first interim payout for three years, but it cautioned second half growth would moderate.

SIG, which signalled the dividend return in March, said there was a noticeable softening in demand in the UK and Ireland towards the end of the half, even before the impact of lower Government spending shows through.

July sales in the UK and Ireland were only “slightly positive”, it added, after a 4.2% improvement over the first six months to £562 million.

The group, which sold three businesses in June and now operates from about 340 trading sites across the UK and Ireland, said residential construction was still moving forward but commercial work had flattened out.

In its newer markets, the group recently received £45 million funding for a project to install solar panels in social housing and has signed a £20 million contract to commence in the second half. Further deals are expected with some non-funded work in the private sector.

Mainland Europe, which accounts for more than half of its business, was much stronger in the first half with sales up by more than 15% as France, Germany and Central Europe all did well, helped by 3% price inflation.

Europe’s contribution lifted total sales to £1.34 billion, from £1.22 billion.

Chief executive Chris Davies said the group is “mindful” of the current economic backdrop and will take “appropriate action” across its business if required, but added SIG is well positioned to make progress this year with the return of the dividend a sign of its confidence.

The interim dividend is 0.75p.