Distribution giant SIG plc has reported a fall in underlying pre tax profits of 21.8% for the first half of 2018. Underlying profits for H1 2018 were £26.9m (H1 2017: £34.4m) on a turnover of £1,360.7m (H1 2017: £1,347.1m).
SIG said that the UK market has not provided a helpful backdrop during 2018. While new housing starts continue to grow, the commercial new build market has slowed significantly in the past twelve months and demand in the residential repair, maintenance and improvement market remains weak, reflecting subdued levels of secondary housing market transactions.
There was weaker profit performance of SIG Exteriors (operating profit of £5.7m, down 69%) and a slower profit recovery than anticipated in SIG Distribution (operating profit of £5.5m, up 90%). SIG also said it is accelerated transformational plans in these businesses and, as a result, are expecting significant profit improvement in the second half of 2018 and beyond.
Performance in Ireland was stronger, with LFL sales up 9.7% and operating profit up 25.0% to £3.0m, benefiting from favourable conditions in the Irish construction market.
Meinie Oldersma, SIG’s chief executive, said: “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.”
