SIG jumps on strong profits update

Building products distributor SIG has seen a big jump in its share price after announcing profits before tax for 2011 will be above market expectations.

In today's guidance SIG also says sales from continuing operations for 2011 were approximately £2,740m, an increase of nearly 8% compared with 2010.

In mainland Europe, which accounts for 56% of sales, revenues grew by 11%, with France particularly strong, up 14%. SIG says this performance is partly related to investment in new branches.

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In the UK & Ireland, which make up around 44% of sales, revenues were up around 3.5%, with sales in the UK up by 4% and down by 1% in Ireland.

SIG expects net debt to have reduced from £163m on June 30 2011 to £120m by the end of the year.

In an effort to streamline the management structure Robert Barclay, previously Managing Director of SIG Distribution, has been appointed the Managing Director of the UK & Ireland division.

The group also believes it can make a further £5m in cost savings during 2012 by rationalising its branch network.

By 11.12am shares in SIG were 11% up on last night's close at 101.3p. Over the last 12 months the stock has fallen 30%. Of note, the company's share price is now trading near an area of technical resistance, around 100p.

BS