26th Mar 2020 10:51
(Alliance News) - SIG PLC on Thursday said it expects its 2019 results will align with prior guidance but posted an operating loss for the first two months of 2020.
The building materials supplier said it is forecasting a 2019 pretax profit of around GBP42 million, in keeping with prior guidance from January and February. It will post its annual results in the week starting April 27.
However, due to "a continuation of the challenging trends seen in the last quarter of 2019", SIG suffered an approximately GBP9 million operating loss for the first two months of 2020. Like-for-like sales were down by around 11% for the two months.
On Covid-19, SIG said: "Whilst the group has not experienced any significant sales impact from Covid-19 to date in the UK, trading has continued to be subdued. In mainland Europe, our first region to experience the effects of government restrictions on movement, the vast majority of our trading sites remain open. Trading has generally held up, though may face further pressure as the situation develops."
SIG is taking steps to reduce its cash outflow, including pausing programmes that need significant cash investment or do not provide business benefit in the near-term.
"The group is also carefully managing its working capital, subject always to the overriding need to continue to provide good service and support to its customers, suppliers and other stakeholders," SIG said.
In order to preserve liquidity, SIG has opted not to declare a full year dividend or consider returning recent disposal proceeds to shareholders. This includes the approximately GBP187 million of cash from the sale of its Air Handling division to France Air Management SA.
Provided the UK Competition & Markets Authority opts to note refer the deal to phase 2 investigation, SIG also expects to complete the sale of is Business Solutions business in the third quarter of 2020.
SIG's cash resource currently stands at around GP135 million and it is in talks with lenders "to release additional liquidity as required". SIG also said it intends to make use of any tax relief or government measures offered when available.
"It is anticipated that the dynamic government actions taken across Europe to contain the spread of Covid-19 will result in material changes to the trading environment over the coming weeks. Given the rapidly evolving situation, it is therefore too early to estimate the likely impact on trading at this stage and, as a result, not possible to provide earnings guidance for the current financial year," said SIG.
Shares in SIG were marginally higher at 30.93 pence in London on Thursday morning.
By Anna Farley; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
SIG