SIG shares slide after warning

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​Shares in insulation giant SIG plunged over 20 per cent this morning after the group warned that deteriorating conditions in mainland Europe, particularly in France, will hit annual profits.

​The Sheffield-based group said ​​​it now expects full year underlying ​pre-tax ​profit​ to be between £85m ​and​ £90m​, down from £98m last year.

While the UK market has held up, profits have been dragged down by weak euro zone countries.

​Group like-for-like sales ​rose 0.2​ per cent in the nine months to September 30​, with the UK & Ireland ahead by 2.0​ per cent​ and ​m​ainland Europe down ​by ​1.7​ per cent.

European trading deteriorated over the summer and in the three months to September 30, group ​like-for-like sales fell 0.9 per cent, with the UK & Ireland up 0.4 per cent and mainland Europe down 2.3 per cent.

At its ​h​alf ​y​ear ​r​esults ​i​n August, SIG s​aid it expected to make year-on-year progress assuming the improving sales trend in ​m​ainland Europe continued.

​This morning it said the​ trend did not continue with market conditions deteriorating in the second half, particularly in France. This was most notable in September, although October remained difficult. SIG ​said it had also been ​hit by a lower than anticipated level of demand in the UK ​repair, maintenance and improvement​ market.

​SIG said the ​challenging market conditions have hit gross margin, which is now expected to be flat year-on-year, with procurement savings being offset by competitive pressures and adverse volume effects.

​Despite this the ​group ​said it is encouraged by opportunities to improve efficiency over the medium-term, particularly in supply chain and procurement.

SIG ​said it will accelerate its supply chain review in response to the market downturn​ and it expects to make savings of at least £20m​.​

​It said this will be in addition to efficiencies being delivered ​by​ the ​g​roup’s procurement initiative.

​It said a​ detailed update will be ​given at the ​g​roup’s Capital Markets Day on November ​16​.