Interim Management Statement

RNS Number : 2944W

SIG PLC

17 November 2010

 



SIG plc

Interim Management Statement

Wednesday 17 November 2010

SIG plc, a leading European specialist supplier of insulation, interiors, exteriors and specialist construction products, today issues the following Interim Management Statement covering the period from 1 July 2010 to the date of this announcement.

As management had predicted, the end markets in which SIG operates have continued to stabilise during the second half of the year. In aggregate, modest like for like sales growth has been achieved in each of the four months from July to October 2010. This has been driven largely by a gradual improvement in residential construction markets, although some sectors and countries have remained in negative territory when compared to the same months of 2009.

Accordingly, Group sales year to date in constant currency are down 1% on 2009, but are up by 3% since the end of June compared to the same period in 2009.  Markets remain very competitive and gross margins have shown no improvement compared to H1.

In light of the H2 sales trends, whilst recognising the usual seasonal risks to trading in the final weeks of the year the Board is confident that underlying profit before tax* for the year will be in line with the current consensus market expectation of  £61.3m.

Trading Summary

UK and Ireland (c.48% of Group Sales)

In the UK and Ireland combined, sales for the year to date in constant currency are down 3% compared with prior year and by 1% in H2 to date.

In the UK, sales in the Group's distribution and merchanting businesses (c.87% of UK sales) have continued the improvement seen in Q2 and are now positive on a year to date basis compared to prior year.  However, in the case of the Interiors Manufacturing and Energy Management divisions, sales volumes continue to run at a substantially lower rate than last year.

While legislation to extend the CERT scheme was passed into law in July, it will be 2011 before the resulting increased funding feeds through into improved sales volumes in the Energy Management division, whose main area of activity of retrofitting insulation in residential property is strongly influenced by CERT.

Although volumes are down in the UK Interiors Manufacturing division, better than expected progress with the restructuring programme in that business unit has been achieved since August 2010, and a portion of the benefit will now be realised in the current year.

In Ireland, which accounts for around 3% of Group turnover, trading conditions remain difficult. Against weak prior year comparatives, however, like for like constant currency sales moved into positive territory in both September and October.

Mainland Europe (c. 52% of Group Sales)

In Mainland Europe, trading performance in H2 has been stronger than in the UK, with sales year to date in constant currency 1% ahead of the equivalent period in 2009 and up by 6% in H2 to date.

Following a difficult H1 in which extreme weather on the continent severely impacted construction activity in the first quarter, as forecast by management overall trading in H2 across SIG's Mainland European businesses has continued to improve. While non-residential construction activity remains weak in all of SIG's countries of operation, as in the UK those businesses most exposed to the residential construction sector continue to show progressive improvement compared to prior year, having moved into positive territory overall in Q2.

Within SIG's Mainland European portfolio, France and Germany (c.79% of Mainland Europe sales) have shown the best progress. Since the summer, volumes in the Poland and Central European region have also improved and are now showing some growth compared to the same period last year.

In contrast, in Benelux, where the economic recession impacted later than elsewhere in Europe, trading remains difficult and sales continue to decline.

Cost saving measures

Management has identified some further opportunities for cost savings across the group, and intends that all significant restructuring measures will be finalised before the end of the current year.

Financial position

A tight rein on all non-essential capex and focus on further cash management and working capital improvement has continued. On a constant currency basis the Group remains confident that the level of net debt at 31 December 2010 will be below the £227m reported at 30 June 2010.

Summary and Outlook

In the short term, the Board expects the mildly positive sales trends experienced so far in H2 to continue through the remainder of 2010.

Looking ahead, the Board believes that the Company's markets and geographies overall may see some slight growth in 2011. Although residential construction is expected to show modest improvement, and private sector non-residential activity should stabilise during the course of the first half of the year, there is nevertheless some downside risk to consumer confidence and spending as a result of Government fiscal and austerity measures being taken across Europe.  Markets are expected to remain competitive and gross margin pressures are unlikely to ease.  Against this background, the Board expects SIG to make progress in 2011.

In the medium to long term, the Board remains confident that SIG's position as Europe's leading distributor of insulation coupled with its operational expertise and track record mean it is exceptionally well placed to take advantage of the long term demand drivers for energy efficiency and carbon reduction solutions throughout all regions in which it trades and to pursue at the appropriate time other organic growth opportunities.

*     Underlying profit before tax is before the amortisation of acquired intangibles, impairment charges, gains and losses on derivative financial instruments and restructuring costs.

Conference Call

There will be a conference call with management at 9.00 am this morning to discuss the statement.  The dial in number is [phone].

Password: SIG

The call is available for replay until 24 November 2010.  Please dial [phone] followed by Access Pin - 3527328#

Enquiries

Chris Davies, Chief Executive            -           SIG Plc    + 44(0)114 285 6300

Gareth Davies, Finance Director

Faeth Birch / Gordon Simpson            -           Finsbury  + 44(0)207 251 3801

Cautionary Statement

This Interim Management Statement is prepared for and addressed only to the Company's shareholders as a whole and to no other person.  The Company, its directors, employees, agents or advisors do not accept or assume responsibility to any other person to whom this Interim Management Statement is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.

Certain information included in this Interim Management Statement is forward looking and involves risks and uncertainties that could cause the actual results to differ materially from those expressed or implied by forward looking statements.  It is believed that the expectations set out in these forward looking statements are reasonable but they may be affected by a wide range of variables which could cause future outcomes to differ from those foreseen in forward looking statements, including but not limited to, changes in risks associated with the level of market demand, product availability and pricing, competitor risk, credit risk, credit insurance, restructuring of SIG and exchange rates.  All statements in this release are based upon information known to the Company as at the date of this Statement.  The Company undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise. 

 

END

 

 

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