SIG profit falls, outlook marred by austerity cuts

INSULATION and roofing group SIG said its first-half pretax profit slipped 16 per cent and warned on the impact of government austerity measures, despite sales picking up in the second quarter.

"SIG's management remains cautious on how its markets will develop over the next few months...based on the continuing macroeconomic uncertainty and concerns about the potential impact of government austerity measures and credit availability," chairman Les Tench said in a statement today.

The Sheffield-based company reported an underlying pretax profit of 18.5m for the six months to end-June, compared with 21.9m in the same period last year.

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Sales across the group recovered in May and June after cold weather affected the start of the year, but a competitive pricing environment and decline in activity in non-residential construction squeezed margins.

The building industry is suffering as the public sector work that propped it up during the downturn in commercial activity has slowed as government austerity measures kick in.

The scrapping of the UK's Building Schools for the Future project will cost global building companies $9 billion alone in cancelled contracts.

Irish building materials giant CRH warned yesterday that earnings will fall due to the faltering U.S. economic recovery, knocking shares across the sector.

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In the UK, construction work declined during the second quarter, with surveyors turning more pessimistic on the outlook for the next 12 months, according to the RICS UK Construction Market Survey.

Shares in SIG closed at 90.7 pence yesterday, valuing the company at 556.7m.

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