8th Mar 2019 08:06
LONDON (Alliance News) - SIG PLC held its 2018 dividend Friday as profitability improved amid widening margins, despite revenue struggling in "challenging" markets with further sales pain expected in 2019.
In 2018, the building materials firm swung to a GBP28.5 million pretax profit from a loss of GBP54.7 million the year prior. This was despite revenue falling 4.9% to GBP2.74 billion from GBP2.88 billion the year before.
Profit performance was helped by a sharp fall in one-off costs in 2018 to GBP46.8 million from GBP124.1 million the year prior, primarily due to a steep fall in losses associated with the sale or closure of non-core businesses to GBP6.7 million from GBP72.4 million the year before.
Underlying pretax profit, excluding these exceptional charges, widened 8.5% to GBP75.3 million from GBP69.4 million the year before.
"As expected, our transformation strategy began to deliver during the year and we saw significant operational and financial progress in the second half," Chief Executive Meinie Oldersma said.
"Despite challenging market conditions and lower revenue in our largest markets, our focus on pricing and profitability over volume, coupled with tighter control over operating costs, has enabled us to grow our gross margins and profit."
SIG proposed a 2.5 pence per share final dividend, unchanged on the year prior. For the full year, the dividend also remained unchanged at 3.75p.
"We have continued to strengthen our balance sheet during the year, enhanced by the disposal of peripheral businesses and structural reductions in levels of working capital, particularly stock," Oldersma added.
"We have now reduced debt by over a third since the start of 2017. Leverage reduction remains a key priority for the group and we expect further significant progress during 2019 towards our medium term target of headline financial leverage below 1.0 times."
Net debt shrunk to GBP189.4 million at the end of 2018, down 27% from GBP258.7 million the year prior. The net debt to earnings before interest, taxes, depreciation and amortisation stood at 1.7 times from 2.3 times the year prior.
"The group brings considerable financial benefits into 2019 and the delivery of a step change in performance in SIG Distribution has given us confidence to accelerate the pace of transformation in other major group businesses," Oldersma continued.
"Trading conditions remain challenging, with the outlook in many of our end markets uncertain, and the group expects continuing like-for-like sales declines in the first part of the year," Oldersma said.
"Notwithstanding these headwinds, the margin and cost actions taken in 2018 give us good visibility of further significant progress in the current year."
In 2018, underlying like-for-like revenue for the fell 2.1%. This figures excludes the numerous non-core businesses SIG has either closed, sold or is in the process of doing so during the year. On an underlying basis, revenue fell to GBP2.68 billion from GBP2.72 billion on the year prior.
"While much work remains to be done, our delivery in 2018 and the momentum brought into 2019 confirm that our transformation of SIG is on track," he said.
In a separate announcement, SIG said Non-Executive Director Janet Ashdown would retire at the end of the FTSE 250-listed firm's annual general meeting on May 8. SIG has begun to search for the replacement for Ashdown both as a non-exec and chair of the remuneration committee.
"On behalf of the board," Chair Andrew Allner said, "I would like to thank Janet for her significant contribution and dedication over the last eight years. We wish her well for the future."
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