SIG sells two businesses amid Brexit slowdown

Shares of Sheffield-based European building materials supplier SIG fell about 16% on Monday after it warned in a trading update that a deterioration in construction activity has accelerated over recent weeks, notably in the UK and in Germany.

The company now expects “significantly lower underlying profitability for the full year than its previous expectations.”

SIG also said it agreed to sell its Air Handling Division to France Air Management SA for an enterprise value of £198.3 million and sell its Building Solutions business to Ireland’s Kingspan Group for £37.5 million.

The disposals will help cut SIG’s debt.

“The group has been reporting during the year a deterioration in the level of construction activity in key markets and highlighting a number of key indicators pointing to further weakening of the macro-economic backdrop, notably in the UK and in Germany,” said SIG in its update.

“This deterioration in trading conditions has accelerated over recent weeks, and political and macro-economic uncertainty has continued to increase.

“Management is taking ongoing actions to address the continuing market weakness. 

“Further benefits from transformational initiatives and the group’s normal seasonality are still expected to deliver a stronger second half.

“However, the recent further weakening of the trading backdrop as the group has entered its traditionally strongest trading months of the year means that the board is now anticipating, in both the specialist distribution and roofing merchanting businesses, significantly lower underlying profitability for the full year than its previous expectations.

“The group is today separately announcing that it has entered into agreements following competitive processes to sell its Air Handling Division and also its Building Solutions business, which when completed will significantly strengthen the group’s balance sheet.”