SIG plc, the distributor of specialist building products in Europe, with strong positions in insulation & energy management, interior fit out and roofing, reported a statutory loss before tax of £106.3m for the year to 31 December 2016.
Once discontinuing businesses are excluded the underlying profit before tax (PBT) was in line with expectations at £77.5m. The Group also announced the appointment of Meinie Oldersma as the new group chief executive. Shares were up 10% in early trading.
2016 revenue in SIG Distribution (SIGD), the Group’s specialist UK insulation and interiors distribution business, was up 4.5% to £769.5m (2015: £736.5m), having benefited from the acquisition of SAS Direct, a leading specialist supplier of partitioning and suspended ceiling products.
The specialist insulation and interiors market in the UK, however, remained competitive, with other market participants investing in new branches and price in an attempt to grow market share. In this environment SIGD continued to grow LFL sales (up 1.1% in the year), but this growth was at the expense of gross margin.
The Group’s response has been to slow or stop a number of its internal initiatives so that its branches can refocus on customers and drive sales growth. In addition it has upgraded its sales and pricing capabilities and is improving its warehouse and logistics efficiency using improved management information.
In December SIGD opened its first regional distribution centre (RDC) in Manchester. This new facility provides customers with a wide range of SIG’s product range including structural and technical insulation, interiors, construction accessories and fixings. Having suspended the roll-out of other RDCs, at least temporarily, SIG will now monitor progress on this new site, along with its other recently opened RDC in Dublin, before deciding on the next appropriate steps for this programme.
Mel Ewell, interim chief executive, said: “We have delivered underlying PBT in line with our previously stated range, but we are disappointed with the overall financial performance of the Group in 2016.
“Although the Board believes that the Group’s strategic direction is correct, implementation has proved challenging. Accordingly, since November we have slowed or stopped a number of internal initiatives, which will allow our team to refocus on customers and sales growth in order to generate cash and improve ROCE. This will ensure that we build on SIG’s significant potential in 2017.
“Trading in the first two months of 2017 has been in line with the Board’s expectations, although markets remain competitive and we are experiencing some supplier price inflation. The longer term outlook in our core markets continues to offer considerable opportunity and SIG remains a good business with strong market positions which is capable of delivering much more.”