SIG is on course to achieve profit before tax of c.£75m for 2018 according to a trading update published this morning, which outlined that Group revenues from continuing operations decreased by 1.4% in the year, with like-for-like (LFL) revenues 2.3% lower, however, the largest falls were seen in UK and Ireland.
Despite challenging market conditions and lower trading revenues in the second half of the year, particularly in December, SIG said that its transformation programme continues to progress at pace. The Group’s anticipated profit before tax of c.£75m, includes £2-3m of property profits in the year.
Commercial construction demand remained dampened by macro-economic uncertainty, house price inflation slowed and secondary housing market transactions continued to fall. This weaker trading environment impacted on demand for SIG’s products and was a key factor behind the lower LFL revenues in the UK and Ireland, down 8.8% in the second half. Revenues at SIG Distribution also continued to reflect the focus on improving profitability, which has delivered higher gross margins at the expense of lower revenue.
Trading conditions in construction markets across Mainland Europe also slowed materially in the second half, particularly in France and Germany.
The Group has delivered significant improvement in its operational and financial performance during the second half of 2018, in line with its strategy. The focus on better pricing management and the planned withdrawal from unprofitable business has reduced revenue in the second half of 2018, but increased gross margins above our expectations. Falling headcount has contributed to reduced operating costs.