22nd Oct 2015 06:44
LONDON (Alliance News) - Building products company SIG PLC on Thursday said its sales performance has diverged in the first nine months between its UK and European operations and said continued weakness in the latter, plus some softness in the UK repair, maintenance and improvement market, mean it now expects its underlying pretax profit to fall year-on-year.
SIG said it now expects its underlying pretax profit for the year to the end of December to be GBP85 million to GBP90 million, compared to GBP98.1 million in 2014. The underlying figures strip out any exceptional items and the effects of acquisitions and disposals.
The company said its like-for-like sales at the group level were up 0.2% in the first nine months of 2015, with the UK and Ireland showing 2.0% growth but Mainland Europe like-for-like sales declining 1.7%. The situation deteriorated in the third quarter, as SIG's group like-for-like sales fell 0.9% in that quarter alone, with the UK & Ireland showing growth of 0.4% but Mainland Europe sales down 2.3%.
SIG said in its interim results in August that it expected to make progress in its financial results for the year assuming an improvement in Mainland Europe. That improvement has not materialised in the third quarter and conditions have actually deteriorated, particularly in France. Added to this, SIG has been hit by lower-than-expected demand from the repair, maintenance and improvement markets in the UK.
In response to the slowdown in its markets, SIG has accelerated its push to cut costs in its supply chain, with savings of at least GBP20.0 million expected to be delivered from the plans, focused on improving efficiency in its procurement practices.
By Sam Unsted; [email protected]; @SamUAtAlliance
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