12th Jan 2006 07:00
SIG PLC12 January 2006 TRADING STATEMENT 12 JANUARY 2006 SIG plc, the leading supplier of insulation, roofing, commercial interiors andspecialist construction products to the construction and building industries,issues the following trading update for the year ended 31 December 2005 inadvance of the preliminary results, which will be announced on 8 March 2006. Trading performance in the second half of 2005 has exceeded expectations, havingproduced substantial growth in sales and operating profits compared with thecorresponding prior year period. Better than expected like for like performance in each of the Group's geographictrading areas, together with a strong contribution from businesses acquired in2005 and in the latter part of 2004, produced very strong results in the secondhalf of 2005. Total sales for the year exceeded £1,630m, an increase of approximately £232m(16%) over 2004. On a like for like basis (i.e. excluding the impact ofacquisitions made in 2004 and 2005), sales growth was c.9%. For the year ended 31 December 2005, underlying profit before tax andamortisation of intangibles is expected to be not less than £94m. Thisrepresents an increase of c.£23m (33%) over the £70.9m (adjusted for IFRS)published for the year ended 31 December 2004, and is in excess of analysts'consensus expectations. This figure of £94m is before a goodwill impairment charge of £5.6m relating tothe Screenbase business, and a credit of c.£1.9m within other finance chargesrelating to hedge ineffectiveness under IAS 39. Operating profit, before the amortisation of intangibles and the impairment ofgoodwill is expected to exceed £101m, an increase of c.£24m (31%) over the£77.0m published for the year ended 31 December 2004. UK and Republic of Ireland (c.66% of Group sales) Sales in our largest geographic region increased by approximately 20% over 2004,with like for like growth in excess of 9%. Operating profits were strongly ahead of prior year, driven by substantial likefor like growth and the impact of recent acquisitions. Sales and operating profits were increased in all businesses, against thebackground of strong demand from non-residential construction markets. Demandfrom housebuilding and other consumer-led sectors was more subdued, affectingparts of the insulation and roofing markets. Mainland Europe (c.30% of Group sales) Total sales in Mainland Europe increased by approximately 9% in Sterling and 8%in local currencies. Like for like sales growth in local currency was c.6%. Against the background of mixed market conditions, like for like sales andoperating profits were increased in all countries in which the Group has tradingoperations. Market conditions in Germany continued to be very challenging.Demand in France was good, and showed some improvement in Benelux and Poland. USA (c.4% of Group sales) On an entirely like for like basis, sales were increased by c.18% in Sterling,and c.16% in Dollars, and operating profits were substantially increased. Increased sales resulting from improved underlying market conditions weresupplemented by the recent surge in demand for insulation materials essential tothe ongoing reconstruction of power and petrochem facilities following thehurricane damage which occurred in September. Acquisitions During 2005 the Group completed 21 acquisitions, with combined annualised salesof c.£145m. 17 of the acquisitions were made in the UK, comprising 2 in insulation, 9 inroofing, 1 in commercial interiors and 5 in specialist construction products. The remaining 4 businesses acquired are in Mainland Europe, comprising aninsulation business in France, an insulation and a commercial interiors businessin Benelux, and a commercial interiors business in Germany. Total consideration for acquisitions in 2005 amounted to c.£110m, includingassumed debt. Outlook Overall conditions in the main markets and the countries in which the Groupoperates are not currently expected to change significantly in 2006 comparedwith 2005. In general, demand is expected to improve modestly, combined with lowprice inflation. The most important single driver of demand for the Group is non-residentialbuilding and construction activity in the UK, which includes health, education,commercial offices and other major projects. It is believed that the pipeline ofwork in these markets will continue throughout 2006. Demand from housing andconsumer-led markets is more uncertain. The high level of price increases implemented throughout 2004 had a beneficialimpact on average selling prices in 2005. It is anticipated that the impact ofprice inflation in 2006 will be less marked. The acquisitions made during 2005 are performing well and are expected to make ameaningful addition to organic growth in 2006. The Group has sound finances andcontinues to seek further opportunities to achieve growth. The Board is confident that further progress will be made in 2006. Analyst Conference Call There will be an Analyst conference call at 9.00 am today. The dial in number is0207 162 0025. Enquiries:David Williams, Chief Executive SIG plc 0114 285 6300Gareth Davies, Finance DirectorFaeth Birch / Gordon Simpson Finsbury 020 7251 3801 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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