24th Jun 2024 10:51
(Alliance News) - SIG PLC said Monday it is grappling with tough market conditions, and it now expects annual profit to be weaker than the market forecasts.
SIG shares slumped 11% to 24.40 pence each in London on Monday morning.
The Sheffield-based supplier of insulation, roofing, commercial interiors and construction products said market conditions have remained challenging in the calendar year to date.
Like-for-like sales in May and June to date are down around 7%, similar to that seen in the first four months of the year, but behind expectations, SIG said.
SIG said softness in the building and construction sector has been most notable in French and German markets, and in the end markets of its UK Interiors business.
As a result, SIG expects 2024 full year underlying operating profit to be in the range GBP20 million to GBP30 million, below the current analyst range.
SIG put the analyst range at between GBP36.7 million to GBP43.0 million, as of Friday.
In the first half, SIG expects to report underlying operating profit of between GBP10 million to GBP12 million.
SIG said it continues to perform well relative to its markets and is also continuing to drive cost reductions and efficiency initiatives.
These support continued expectation of a stronger second half performance and will help drive higher profitability as markets recover, it added.
Cash performance to date remains in line with expectations, SIG stated.
Peel Hunt analysts Clyde Lewis and Sam Cullen said the broker cut its operating profit estimate for 2024 by 44% and for 2025 by 32%.
"This change sees us shift our recovery expectations out by a year," the analysts added.
"In light of the lower forecasts, we are cutting our target price to 28p [from 37p] and reducing our recommendation to Add until we see signs of improving market volume trends."
By Eric Cunha, Alliance News news editor
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