SIG warns Brexit uncertainty is not in interests of any business

'‹Insulation giant '‹SIG'‹ has warned that the threat of a Brexit '“ Britain voting to leave the European Union '“ is a cause for uncertainty which could damage confidence.

The Sheffield-based firm, which has adopted a neutral stance on the issue, said it doubted a vote either way would have an impact on the company itself, but expressed concern about the ramifications.

SIG’s chief executive Stuart Mitchell said: “The Brexit potential is a cause for uncertainty and uncertainty is not good for any business. We are concerned about uncertainty in terms of confidence.”

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SIG said it is fairly immune to the outcome as although 50 per cent of its sales come from the Continent it doesn’t import or export.

“Our French businesses buy products in France and our German business buys products in Germany so we have very little activity that crosses borders,” said Mr Mitchell.

He was speaking as the group announced a 12 per cent fall in underlying pre-tax profits to £87m in 2015 as​ weak market conditions​ and foreign exchange fluctuations hit trad- ing​.

Mr Mitchell said he was​ disappointed by the group’s 2015​ performance although trading has been more encouraging in 2016 and there are signs of a market recovery.

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“Sterling is what it is. Clearly it hasn’t helped us. We got side swiped in the third quarter by a significant decline in French markets but it did right itself in the fourth quarter,” he said.

In the UK, sales from continuing operations rose six per cent, partly due to acquisitions which added £64m in revenues over the year. Excluding acquisitions, like-for-like sales rose 0.8 per cent.

The private new build residential sector was the strongest segment of the UK construction market in 2015. SIG said it expects to see robust growth in this sector in 2016, although the rate of expansion is likely to slow down to five per cent.

“All the housebuilders, who are our major clients, are enjoying a purple patch,” said Mr Mitchell.

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In contrast, the UK Repairs, Maintenance and Improvement residential sector proved challenging, particularly in the second half. This hit the group’s exteriors business, which reported a like-for-like sales decline of 4.3 per cent in the second half.

SIG said that weakness in the Repairs, Maintenance and Improvement market correlates, with a time lag, with housing transactions and mortgage approvals, which declined during 2014. Since then transactions and approval rates have begun to recover.

“This has been a difficult year, but you learn from tough times,” said Mr Mitchell. “The things we can control we’re controlling well. We go into 2016 with a mood of quiet optimism. For the first time in a number of years we may see the UK, Germany and France – our biggest markets – all in growth.”

The full-year dividend was raised 4.5 per cent to 4.6p per share.

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Analyst Michael Mitchell at Davy said: “SIG’s poor second-half performance has been well understood for some time. These results fully lift the lid on just how difficult a time the group has had in recent times.

“However, the earnings outlook appears to be improving off the low 2015 base.”