Shares of Sheffield-based European building materials supplier SIG plc fell about 6% on Friday after it warned of a “marked deterioration” in the level of construction activity in the UK and a weakening of the macro-economic backdrop in the UK and in Germany.

Announcing results for the six months to June 30, SIG said underlying revenue fell 5.1% to £1.26 billion.

Underlying profit before tax rose 19.5% to £30 million.

SIG shares fell 6% to around 121p.

SIG CEO Meinie Oldersma said: “We made further progress in H1 2019, demonstrating our ability to deliver a sustained improvement in the operational and financial performance of SIG.

“Underlying profit, return on sales and return on capital employed all improved, and we further reduced net debt and headline financial leverage.

“We continue to deliver increases in gross and operating margins in our UK businesses and have largely completed the transition to a smaller, more focused base of business in SIG Distribution.

“We continue to roll out transformational initiatives across our businesses in Mainland Europe, which we expect to result in further upside over the next twelve months.

“We remain on track to deliver our medium term targets …

“Our previously announced review of strategic options for the Air Handling division is well advanced. A further update will be provided when appropriate.

“The significant improvements in the business during the first half of 2019 have been made against a backdrop of challenging trading conditions in many of the Group’s end markets.

“There has been a marked deterioration in the level of construction activity in the UK as the year has progressed and a number of key indicators are pointing to further weakening of the macro-economic backdrop, notably in the UK and in Germany.

“We continue to see benefits from transformational initiatives across the group’s businesses.

“Coupled withthe group’s normal seasonality, these are expected to deliver further upside in the second half of the year.

“However, political and macro-economic uncertainty continues to increase as we enter the traditionally strongest trading months of the year.

“We continue to monitor trading conditions closely and we are taking actions in anticipation of further market weakness.”

Analysts at Peel Hunt wrote: “The group’s self-help measures are continuing to benefit both the profit base and balance sheet.

“However, the underlying market conditions in both the UK and Germany have continued to deteriorate in the last few months.

“The net effect is a cut to our forecasts of £4-5m for 2019-20.

“There’s be no news yet on an Air Handling sale, but H2 looks likely to us.

“Investors will be frustrated by the softness in the numbers, but the underlying business is getting better.

“We retain our 165p target price.”