9th Mar 2016 12:10
LONDON (Alliance News) - Building products distributor SIG PLC's shares fell on Wednesday after it said its pretax profit increased in 2015 due to lower one-off costs, but revenue was dragged lower by a challenging European market and a slowdown in the UK repair, maintenance and improvement segment.
Shares in SIG were down 7.9% at 133.30 pence on Wednesday.
The FTSE 250-listed group said pretax profit for the year to the end of December rose to GBP51.3 million from GBP39.0 million in 2014, mainly due to lower amortisation and one-off costs booked by the group. Stripping out those one-offs, underlying pretax profit fell to GBP87.4 million from GBP99.1 million.
Revenue edged down to GBP2.57 billion from GBP2.60 billion, partly due to a hit from the weak euro but also tough trading conditions in Europe, particularly the French market, to which SIG is particularly exposed, as well as Germany and Austria.
In France, sales were down 12% over the year, or 2.8% on a like-for-like basis. SIG said the residential market, which accounts for 61% of SIG's revenue in the country, had proved particularly tough, though activity in the non-residential sector had also declined.
Revenue fell 11% in Germany and Austria, or 2.3% on a like-for-like basis, despite 5.5% growth within the new build sector in Germany. SIG said 76% of its revenue comes from non-residential and industrial sectors where trading was weak, noting a 7.8% like-for-like sales decline for its VTI technical insulation business.
In total, revenue declined 8.9% across Mainland Europe, offset slightly by the 5.1% growth in Benelux states.
However, SIG said some encouraging trading signs emerged in the fourth quarter, particularly in France where it said the housing market had stabilised and SIG had seen a return to sales growth.
The lower revenue from Mainland Europe combined with a slowdown in repair, maintenance and improvement in the UK in the second half and meant revenue for the year fell, though it would have increased by 3.7% in constant currencies.
UK & Ireland revenue rose 5.7%, which SIG said was largely driven by a recovery in the Irish market. Like-for-like sales for Ireland were up 13% in 2015 at GBP72.1 million, but the weak euro meant revenue from Ireland was up only 1.5%
SIG will pay a final dividend of 2.91 pence per share, taking its total dividend up to 4.60p, up 4.5% from the 4.40p payout in 2014.
"This year we continue to expect good growth in the UK new-build construction market, primarily driven by the residential segment. Lead indicators also suggest that demand should pick up in the UK RMI sector as 2016 progresses," said Chief Executive Stuart Mitchell.
"Following an encouraging start to the year, with positive [like-for-like revenue] in both the UK & Ireland and Mainland Europe, the scope for further cost savings and growth opportunities within the group mean that we expect to make progress in 2016," he added.
By Hannah Boland; [email protected]; @Hannaheboland and Sam Unsted; [email protected]; @SamUAtAlliance.
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