6th Sep 2019 08:37
(Alliance News) - SIG PLC on Friday reported a sharp drop in first half profit, but a rise on adjusted basis, and said that there has been a marked deterioration in construction activity in the UK.
The building materials company said, however, that its ongoing business transformation and the normal seasonality pattern will lead to a stronger second half, despite increasing political and macro-economic uncertainty.
London-listed shares in SIG were trading 4.7% lower on Friday morning at 123.00 pence each, the worst performer in the FTSE 250 index.
SIG, which supplies insulation and interiors products, posted pretax profit of GBP5.2 million for the six months to June 30, down 73% from GBP19.6 million profit a year ago.
The profit drop was primarily due to GBP22.1 million in exceptional charges including impairment charges, profits and losses on sale or closure of non-core businesses, costs attributable to non-core businesses, and other items.
Stripping out exceptional charges, first half pretax profit jumped 20% to GBP30.0 million from GBP25.1 million year-on-year.
First half reported revenue was down 7.9% to GBP1.27 billion from GBP1.38 billion. Revenue, excluding divested businesses, fell 5.1% to GBP1.26 billion from GBP1.34 billion.
The revenue drop was blamed upon a 3.8% decline in like-for-like revenue over the period, including an adverse 0.6% currency movement and a 0.7% impact from fewer working days.
"We continue to deliver increases in gross and operating margins in our UK businesses and have largely completed the transition to a smaller, more focused base of business in SIG Distribution. We continue to roll out transformational initiatives across our businesses in Mainland Europe, which we expect to result in further upside over the next twelve months. We remain on track to deliver our medium-term targets," said Chief Executive Officer Meinie Oldersma.
First half gross margins increased year-on-year to 27.0% from 26.5%, Adjusted margins increased to 27.1% from 26.4%.
"Our previously announced review of strategic options for the Air Handling division is well advanced. We continue to monitor trading conditions closely and we are taking actions in anticipation of further market weakness," Oldersma added.
SIG has declared an unchanged interim dividend of 1.25p per share.
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