Sheffield’s SIG expects H1 revenue to top £1.1bn

Sheffield-based building materials supplier SIG plc said on Wednesday it expects to report first-half revenues from underlying operations of around £1.11 billion and underlying operating profit of about £13.5 million.

In a trading update for the six months to June 30, 2021, SIG also raised its full year profit outlook.

“Revenues in H1 were strong, with like-for-like (LFL) growth of 33% compared to the Covid-affected prior year and up 1% against 2019, a more meaningful comparator,” said SIG.

“This reflects the ongoing positive impact of the group’s Return to Growth strategy, which is delivering improved organic sales performance, and has been supported by continuing robust demand in the repair, maintenance and improvement (RMI) segments in most markets.

“Profitability improved throughout the period, a result of the normal seasonality in the business and the improving trading across the group.

“As a result, the board expects to report H1 revenues from underlying operations of c£1.11bn, and an underlying operating profit of c£13.5m.

“Both include good progress in the UK, and we expect the UK business as a whole to be just over break-even at the underlying operating profit level for H1, ahead of plan.

“The group finished the period with net debt of £58m, on a pre IFRS 16 basis, and with gross cash balances of £174m.

“Reported net debt on an IFRS 16 basis is expected to be £284m.

“The cash outflow in H1 is largely as expected, driven by the seasonal increase in working capital, which was more pronounced than usual due to the strong trading.

“In addition, where possible and appropriate, we have built up modest increases in our inventory holding levels in light of likely supply challenges in the coming months.”

SIG added: “The French businesses are continuing to perform strongly, benefiting in particular from strong RMI demand in Exteriors, as well as the strong foundations built in the business in recent years. 

“Germany’s performance was encouraging, with good growth throughout the half. We remain confident the Benelux performance will pick up over coming months following the recent changes made in its commercial leadership.

“Our Ireland business was affected by the significant Government restrictions imposed on construction from 1 January 2021 to the end of April, and we expect to see improved growth in the second half.

We are continuing to see shortages of materials in certain areas, as reported previously, and input price inflation remains significant in some categories. We have navigated these challenges with minimal impact to date, despite some longer delivery times.”

In its outlook, SIG said: “The return to profitability in H1 was faster and more significant than previously expected and we exited the first half with strong demand conditions and the benefits of the Return to Growth strategy coming through clearly.

The effectiveness of our supply chain management and commercial agility give us confidence entering the second half, albeit we are mindful that the potential impact of material shortages could be more significant should the situation persist for an extended period.

“As such, we retain a cautious view of H2 at this stage. 

“However, providing there is no significant disruption in coming months, we continue to expect H2 to be both profitable and cash generative, with full year underlying operating profit now expected to be ahead of previous forecasts.”