We're ready for economic recovery, says SIG

The group saw its shares rise 11.8p to 128.6p after it reassured the market that annual profits should at least meet analysts' expectations of 60m.

The group has stripped out costs in response to a slump in volumes. This has resulted in cost savings of 98m following the closure of 152 branches and the loss of 2,800 jobs. The group said there are no plans for any more job cuts among its 11,500-strong workforce.

Chief executive Chris Davies said the group is not expecting to see a recovery in 2010 and the outlook is still very uncertain.

"2009 has been an extraordinary year, the full range of the group's markets have been very difficult," he said.

"2010 will also be fraught with a lot of uncertainty. However the residential new housing construction market has started to exhibit modest, gradual but consistent growth."

He pointed to last week's confident trading update from York-based housebuilder Persimmon, which indicated that the pattern of growth will be sustained in 2010.

"There are some indications that other sectors will follow in due course," he said.

While public sector building such as schools and hospitals are likely to show growth this year, Mr Davies said the commercial sector is expected to continue falling until the end of the year.

Asked whether a change in Government will hit funding, Mr Davies said there will have to be cuts in public spending whoever forms the next Government.

"There will be a reduction in public building projects from 2011 and into 2012 and 2013. The hope is that by that stage the commercial sector will have picked up and taken up the slack," he said.

For the first time, over 50 per cent of the group's sales came from mainland Europe.

"These Continental countries have been hit by the recession, but it has been a shallower fall and they have now come out of recession. There is a resilience from our spread of markets," said Mr Davies.

He forecast that Western Europe will be fairly flat this year, possibly starting to improve by the middle of the year. Central and eastern European markets are expected to take longer to recover.

SIG, which began life as Sheffield Insulations and has expanded to 11 countries across Europe in the past two decades, said total sales for the year dropped 10 per cent to 2.7bn while like-for-like sales fell by 11.5 per cent.

Mr Davies said that in his 35 years in industry he had never seen anything as steep or as unpredictable as this recession.

"I've been through a number of recessions and difficult times in my business career and we've never seen anything like this," he said.

The UK and Ireland were the hardest hit with 2009 sales falling 22 per cent on a like-for-like basis.

SIG said the snow and freezing weather had created two weeks of chaos. "It has been an unhelpful start to the year. People have not been able to get to work and sites have been closed," said Mr Davies, who said that in the past the group has managed to catch up over the year.

THE RISE OF A MARKET LEADER

Founded in 1957 in Sheffield, SIG has grown from a small insulation distribution business into a multi-national company operating in four different market sectors.

The company floated on the London Stock Exchange in May 1989 and is listed in the FTSE 250 within the support services sector.

The group operates in 11 countries in Europe and has small trading operations in a further five, serving a wide range of trades in the building and construction markets.

SIG is managed on a country-by-country basis and organises its activities into four divisions: insulation & building environments, exteriors, interiors and specialist construction products.

The company delivers products to thousands of customers from 800 trading locations across Europe.

It benefits from being the market leader in most of its specialist markets.