9th Mar 2018 13:12
LONDON (Alliance News) - SIG PLC on Friday posted a significantly narrowed pretax loss for 2017 as the company sold poorly performing businesses and improved market confidence in Europe outpaced challenging conditions in UK & Ireland.
Shares in the FTSE 250-listed building products distributor were down 5.2% at 142.10 pence on Friday afternoon.
SIG reported a pretax loss of GBP51.3 million for 2017, narrowed from GBP110.0 million the year before as one-off costs declined to GBP128.2 million from GBP184.4 million in 2016.
The costs incurred for the year came mainly from losses on the agreed sales or closures of non-core businesses and associated impairment charges, as well as restructuring costs mostly incurred in the UK and Ireland region.
Following a disappointing 2016 performance and with the appointment of Nick Maddock as chief financial officer and Meinie Oldersma as chief executive officer, the company has worked to stabilise its business primarily through cutting costs and effectively managing portfolio of businesses.
As a result of the portfolio management, SIG identified several smaller poorly performing business considered "peripheral to its core focus." The businesses represented 13% of the group's total revenue.
At the end of 2016, SIG sold off its UK floor covering distributor Carpet & Flooring, and interest in materials supplier Drywall Qatar.
In the first half of 2017, bathroom pods and utility cupboards manufacturer Metechno was closed, and later on SIG sold its roofline, drainage and plastics products provider Building Plastics.
On an adjusted basis, SIG's group pretax profit rose by 4.3% to GBP79.2 million from GBP75.9 million. Revenue grew to GBP2.88 billion from GBP2.84 billion the prior year, as like-for-like sales grew by 3.8%.
In the UK & Ireland, 2017 revenue dropped to GBP1.40 billion from GBP1.51 billion in 2016, as the company faced challenging conditions due to increased market uncertainty and delays in new housing projects. It also incurred losses from sale and closures of poorly performing smaller businesses.
Mainland Europe, however, saw a substantial revenue lift during the year due to improved market confidence and absence of margin erosion. Revenue for the region grew 11% to GBP1.50 billion from GBP1.36 billion a year ago.
France saw improved market conditions, particularly in the residential sector, and actions taken by roofing business LiTT to increase operational efficiency, the company said. Germany benefited from foreign exchange movements and the company's efforts to move to higher growth residential sector.
SIG's Polish business recovered due to stabilization of the country's construction market following political and economic uncertainty.
SIG declared a dividend of 3.75 pence per share for 2017, up from 3.66p the year before.
"As the group moves into 2018, we are seeing increasingly confident markets across Mainland Europe and Ireland, but also the first signs of capacity and labour constraint in buoyant construction markets. In contrast, we are seeing an increasingly challenging environment in the UK created by macro uncertainty and recent events in the construction industry," CEO Oldersma said.
"Notwithstanding this outlook, we see considerable potential for a significant improvement in operational and underlying financial performance, with execution largely within management's control, and we are working hard to ensure effective delivery," Oldersma added.
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