Trading Statement

RNS Number : 2682H

SIG PLC

10 July 2012

 



10^th July 2012

SIG plc

("SIG" or "the Group")

Trading Update

SIG plc ("SIG" or "the Group"), a leading distributor of specialist building products in Europe, with strong positions in its core markets of insulation & energy management, interior fit out and roofing, today issues a trading update for the six months ended 30 June 2012, in advance of its interim results announcement on 23 August 2012.

Trading

Sales in the first half of the year were flat in constant currency terms against very strong prior year comparatives, despite the increasingly uncertain macroeconomic environment, exceptionally cold weather conditions in Europe in February, and the wettest Q2 on record in the UK.  In constant currency the Group expects profitability to be broadly flat compared to H1 2011.

Due to the weakening Euro, total sales in the first half fell by nearly 4% in Sterling terms. 

Although the weather has made demand patterns difficult to discern, underlying construction activity slowed in May and June, as reflected in a deceleration in SIG's sales growth from 1% in Q1 to a decline of 0.5% in Q2 on a like-for-like constant currency basis.  

Sales in local currency in Mainland Europe were up around 2% compared with prior year, with France and Benelux showing the strongest progression. Overall, sales growth versus prior year was similar in Q1 and Q2.

Sales in the UK fell 1% compared to 2011, with Q2 comparatives showing a decline against prior year following slight growth in Q1. In Ireland, which represents c. 2% of Group turnover, local currency sales were substantially down on 2011.

The Group has maintained last year's trend of improving gross margins and is containing underlying operating cost inflation.  Management continues to adjust the operating cost base in line with prevailing market conditions.

Financial Position

Net debt at 30 June 2012 was c.£130m, a reduction of c.£33m compared to a year ago, but higher than the position at 31 December 2011 due to normal seasonal movements in working capital. 

Growth Initiatives

SIG has opened 15 new branches so far this year, 11 in Mainland Europe and 4 in the UK.  It has also acquired a small insulation distribution business in the Netherlands, the gross assets of which as at 31 December 2011 were €1.9m.

Outlook

SIG indicated at the start of the year that it expected construction activity in its markets to decline slightly in 2012, and trading in the first half substantiated this view.  For the remainder of the year the uneven demand patterns experienced so far are expected to continue with the Olympic Games likely to disrupt trading in the London region during the Summer.

Although the nature of SIG's business means that forward visibility is limited, recent macro economic data and construction sector forecasts suggest that markets will remain challenging this year.

Against this background, SIG remains focused on outperforming its markets, on cash and working capital discipline, and improving efficiency so as to manage what appears to be a slight increase in downside risks.

Conference Call

There will be a conference call with management at 8.00am this morning to discuss the statement.  The dial-in number is + 44 (0)20 3140 0722 (no pin required).

 

Enquiries

Chris Davies, Chief Executive Doug Robertson, Finance Director Simon Bielecki, Head of Investor Relations	SIG plc		0114 285 6300 0114 285 6324
Richard Mountain / Nick Hasell	FTI Consulting		020 7269 7291

Cautionary Statement

This Trading Update 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 Trading Update is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.

Certain information included in this trading update 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.  More information about the risks and uncertainties that may affect the Group's performance is contained in the Annual Report to Shareholders for the year ended 31 December 2011.  All statements in this release are based upon information known to the Company at the date of this Trading Update.  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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