SIG warns of ongoing tough conditions as group sales fall

SIG, a distributor of specialist building products in Europe, has warned trading conditions since the start of the year have remained challenging, worsened by the harsh winter weather which affected European construction markets.

Despite this, the group outperformed its markets during the first quarter by around two per cent, somewhat mitigating the effects of the prevailing market environment.

Group sales per day from continuing operations fell by around 2.5% in sterling and by around 4.0% in constant currency for the first four months compared to the same period last year.

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In Mainland Europe sales per day in constant currency for the first four months were down by about 4.5%, with France and Germany both down by a similar amount. In the UK & Ireland sales per day fell by about 1.0% (excluding SIG Energy Management).

Trading improved from mid-April onwards as the weather conditions reverted to seasonal norms, with group sales per day for April marginally ahead of last year in sterling.

The gross margin has been maintained for the first four months compared to prior year.

In a statement, the company said: "The combination of challenging markets and harsh weather in the first four months of the year is expected to affect SIG's first half performance adversely, as the group does not anticipate that the shortfall in sales to date will be fully recovered in May and June. However, management has moved quickly to mitigate the impact on the full year by tightening discretionary expenditure.

"While the extreme weather conditions have made it difficult to discern underlying trading patterns so far, SIG continues to expect to make further progress in 2013 by focusing on sales outperformance, gross margin enhancement and improved operational efficiency.

"The group's medium term target to achieve a return on capital employed 300 basis points ahead of its weighted average cost of capital, assuming flat markets, remains unchanged."

The share price fell 2.14% to 168.90p by 10:40 Thursday.

NR