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FTSE 250 building materials supplier SIG (LON:SHI) has announced a 21.8% drop in underlying pre-tax profits for the six months ended 30th June. Management said that conditions had been difficult due to weather conditions and macroeconomic concerns during the period, but that operations outside the UK had performed well and the group’s transformational plan was proceeding well.
Chief executive Meinie Oldersma said: “Ten months into our transformation of SIG, progress is well underway and we are starting to see evidence of delivery.
Leverage has reduced, return on capital employed has increased and the refocus of our portfolio of businesses through exit or divestment is largely complete. Gross margins are improving in key businesses, operating costs are under control and working capital is beginning to fall. Our senior leadership team is in place, our management capability is improving and better data is beginning to make a difference to the quality of our decision-making.
The first half did not provide the trading backdrop we wanted, with significant challenges in the UK market as a result of the poor weather in the early months of the year and continuing macro uncertainty. This has impacted both our UK revenues and operating profit in the year to date, which are behind where we had hoped they would be at the start of the year. In contrast, the trading environment across Mainland Europe and Ireland has been positive, which is reflected in the improved first half results from our non-UK businesses.
Given the continuing challenging trading conditions in the UK, we have accelerated certain transformational workstreams and we now have increased visibility over delivery of significant profit improvement during the second half of 2018 and beyond. As a result, we remain optimistic of delivering a full year result in line with our expectations absent any further deterioration in trading conditions, notably in the UK. Whilst there remains considerable work to be done, we remain confident in our ability to deliver our transformational plans”.
Shares in SIG climbed by 1.49% to 122.60p (as of 13:45 BST).