TIDMSHI
RNS Number : 3374Y
SIG PLC
08 May 2019
8 May 2019
SIG plc: AGM Trading Update
Transformation continues to deliver
SIG plc ("SIG" or "the Group") is a leading supplier of
specialist building materials to trade customers across Europe,
with strong positions in its core markets as a specialist
distributor of insulation and interiors products, a merchant of
roofing and exteriors products, and a provider of air handling
solutions. The Group today issues a trading update for 1 January to
30 April 2019 ("the period"), in advance of its Annual General
Meeting which is being held at 12 noon today at the offices of
Herbert Smith Freehills, London.
Trading summary
The Group made further significant operational and financial
progress in the first months of the year, reflecting the good
momentum brought into 2019 as a result of the margin and cost
actions taken in 2018. SIG continues to transform its ways of
working, with the move to a more integrated functional operating
model within its divisions resulting in further reductions in
headcount and operating costs in the first part of this financial
year. Pricing initiatives continue to deliver margin improvement,
and in SIG Distribution and, to a lesser extent, the German
operations, the business remains focused on the transition to a
smaller, more profitable base of activity.
As anticipated at the time of the Group's 2018 results, the
Group saw continuing like-for-like(1) ("LFL") sales declines in the
first part of the year, with Group like-for-like revenues 2.6%
lower. Group revenues from continuing operations were 3.4% lower in
the period, including an adverse 1.3% currency movement offset by a
0.5% improvement from more working days.
Like-for-like sales January to July to December January to
growth (%) April 2019 2018 April
2018
SIG Distribution (15.0%) (8.7%) (1.7%)
SIG Exteriors +0.4% (6.6%) (10.6%)
Ireland & Other UK (0.9%) (8.9%) +4.1%
UK & Ireland (9.2%) (8.0%) (4.1%)
--------------------- ------------ ----------------- -----------
France +1.9% (3.9%) +0.5%
Germany (0.1%) (4.6%) +5.0%
Poland +9.8% +6.7% +15.6%
Air Handling +5.2% +0.8% (0.3%)
Benelux +0.9% +5.4% +5.4%
--------------------- ------------ ----------------- -----------
Mainland Europe +2.7% (1.5%) +3.2%
--------------------- ------------ ----------------- -----------
Group (2.6%) (4.3%) (0.3%)
--------------------- ------------ ----------------- -----------
1: Like-for-like is defined as sales per day in constant
currency excluding acquisitions and disposals. Sales are not
adjusted for branch closures or openings.
At SIG Distribution, the radical actions taken in 2018 to
deliver a step change in performance continue to generate benefits.
The business intentionally brought a much lower, though more
focused, base of business into 2019 which, coupled with the weak
market conditions, resulted in LFL sales down 15.0% in the period.
However, this has been more than offset by the margin and cost
actions taken over the last twelve months and as a result, the
Board continues to expect significantly improved profitability in
SIG Distribution in the current year.
SIG Exteriors and the Group's business in Ireland returned to
LFL growth in the period helped by improved sales performance and
the better weather conditions in February and March compared with
2018. In the UK & Ireland, including SIG Distribution, LFL
revenues were down 9.2%.
LFL revenues across the Group's businesses in Mainland Europe
were up 2.7% in the period, a solid performance against the softer
backdrop seen across European construction markets from the end of
last year, particularly in France and Germany. Revenues from our
French businesses, in particular, performed strongly across most of
the period, before a weaker performance in April as a result of a
ransomware attack which left the business without access to
ordering and accounting systems for a short period of time. Core
systems have since been restored to operation.
Revenues in Germany were affected by our ongoing actions to
reduce the Group's exposure to unprofitable business, however this
was more than compensated by gross margin improvements and as a
result, the business is expecting significantly improved
profitability in the year. Poland continues to report strong growth
and Air Handling again saw good top-line growth, with LFL revenues
up 5.2%, following the successful transition of the air handling
businesses in France and the UK into the broader Air Handling
division, as announced in March.
Leverage and portfolio management
Reducing headline financial leverage remains a key priority as
the Group continues to focus on structural reductions in the level
of working capital and sustained profit improvement to drive
leverage lower. The Group expects further significant progress in
headline financial leverage at the half year and is increasingly
confident that it has a clear path to a level of headline financial
leverage below the 1.0x targeted over the medium term.
The review of strategic options for the Air Handling division
announced in March is ongoing and a further update will be provided
at the half year. In addition, management continues its review of
remaining peripheral businesses within the Group's portfolio.
Outlook
Trading conditions remain challenging and the outlook in many of
our end markets remains uncertain, notably in the UK. The Board
believes it can sustain the pace of transformation during 2019 and,
providing there is no further deterioration in market conditions,
the Board remains confident, despite any impact of the French
ransomware attack noted above, that the underlying profitability
for the full year will be delivered in line with management
expectations.
The Group will issue a trading update for the half year ending
30 June 2019 on 5 July 2019.
Enquiries
SIG plc
Meinie Oldersma, Chief Executive Officer +44 (0) 114 285 6300
Nick Maddock, Chief Financial Officer +44 (0) 114 285 6300
Katharine Baxter, Group Communications +44 (0) 114 285 6300
FTI Consulting
Richard Mountain / Susanne Yule +44 (0) 20 3727 1340
Jefferies Hoare Govett
Ed Matthews / Will Soutar +44 (0) 20 7029 8000
Peel Hunt LLP
Justin Jones / Charles Batten +44 (0) 20 7418 8900
Cautionary Statement
This Trading 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 Trading
Statement is shown or into whose hands it may come and any such
responsibility or liability is expressly disclaimed.
Certain information included in this Trading 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. 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 2018. All statements in
this release are based upon information known to the Company at the
date of this Trading 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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