SIG warns construction markets are likely to continue decline

Building materials distributor SIG has warned that in the absence of any clear signs of macroeconomic improvement in its main countries of operation, the board expects construction markets in 2013 to 'remain challenging and likely to decline at a rate similar to 2012'.

Revenues in 2012 totalled around £2,635m, flat on a constant currency basis, though down by 4.0% in sterling due to exchange rate movements. Underlying profit is expected to be no less than £82m.

The group said trading in the latter half of the year was boosted by resilience in Mainland Europe, particularly France, as well as a strong performance in SIG Energy Management.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

In Mainland Europe sales rose by around 1.5% in constant currency, but fell by about 5.0% in sterling.

In the UK & Ireland sales from continuing operations were down around 2.0% in constant currency, with the UK down 1.5%.

The company is continuing to make a number of cost cuts, and has identified around £3.0m of additional efficiencies from its branch network, meaning it is now targeting a total cost saving target of around £10.0m.

Net debt for 2012 is expected to have fallen to £110m, after £8.0m of expenditure on five infill acquisitions.

In a statement the company said: "The group also anticipates a reduction in volumes for its SIG Energy Management business, due to the end of CERT and a likely slow start-up of the successor Green Deal scheme.

"Against this background, and building on recent performance, SIG expects to make further progress in 2013 by continuing to focus on sales outperformance, gross margin enhancement and improved operational efficiency."

The group also said it plans to sell its Czech and Slovak businesses, which together account for only 1.0% of revenues, to the Woodcote Group, a recent management buyout from Wolseley.

It added: "SIG has decided to concentrate its management and resources in the region on further strengthening its position in Poland, a market to which the board remains fully committed."

NR