REG - SIG PLC - H1 Trading Update

SIGAnnouncement

05/07/2023 07:00

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RNS Number : 9766E  SIG PLC  05 July 2023

5 July 2023

This announcement contains inside information

 

 

SIG plc H1 Trading Update

 

SIG plc ("SIG", or "the Group"), a leading supplier of specialist insulation
and building products across Europe, today issues a trading update for the six
months to 30 June 2023 ("H1" or "the period"), in advance of the release of
its H1 results on 8 August 2023.

 

Key points

·   Group revenue of £1,424m, representing flat like-for-like(1) ("LFL")
revenue versus prior year, reflecting volume declines offset by input price
inflation

·   Market conditions remained challenging and variable, with notably
softer demand in May and June, particularly in Germany and France

·   Underlying operating profit(2) expected to be c.£33m, with early
impact of productivity initiatives partially offsetting demand weakness and
inflationary impact on operating costs

·   Whilst timing of demand recovery remains uncertain, H2 profit is
expected to benefit further from the ongoing productivity initiatives

·   Consequently the Board continues to expect the Group to deliver full
year underlying operating profit within the current range of market
expectations(3), but towards the lower end of that range

·   Cash performance in the period in line with expectations, and
reflecting the normal seasonal increase in working capital.  The Board
expects to report net debt at 30 June of £470m (post IFRS 16) and £176m (pre
IFRS 16)

 

Trading Summary

Group LFL revenue was flat year-on-year in the period, with the continued
positive tailwind from input price inflation being offset by lower volumes.
The overall impact of inflation is estimated to have added c.9% to Group
revenue growth in the period.  As expected, price inflation moderated during
H1 compared to the impact during 2022, as we annualise some of the significant
prior year price increases.

 

Reported Group revenue was 5% higher in the period, including c.3% from
acquisitions, together with c.2% in aggregate from movements on working days
and exchange rates.

 

 1 January to 30 June       LFL      £'m

 Revenue                    growth
 UK Interiors               4%       381
 UK Exteriors               (2)%     221
 UK                         2%       602

 France Interiors           1%       117
 France Exteriors           2%       250
 Germany                    0%       236
 Poland                     (9)%     109
 Benelux                    7%       62
 Ireland                    (18)%    48
 EU                         (1)%     822

 Group                      0%       1,424

 

Market conditions were challenging through H1 across our geographies,
including a notable softening in demand in France and Germany in the last two
months.  Volumes and market conditions were notably weaker in Poland and
Ireland over the period as a whole, with both also coming up against
especially strong prior year comparators.

 

Outlook

We expect weak and uncertain demand conditions throughout the rest of the
year, along with a continued, but further moderating, revenue tailwind from
input price inflation.  Whilst trading in recent weeks leads us to be more
cautious as to the timing of any broad-based improvement in demand conditions,
the second half will benefit from ongoing productivity initiatives as well as
an expected profit on one specific property move.  Consequently, the Board
continues to expect the Group to deliver full year underlying operating profit
within the current range of market expectations, but towards the lower end of
that range.

 

Notwithstanding short-term market weakness, we continue to progress the
strategic and operational initiatives which underpin our ambition for the
Group.  As a European market leader in the supply of specialist insulation,
and with 80% of the Group's sales covering insulation and the wider building
envelope, we are well-positioned to benefit from long-term structural growth
drivers, notably sustainable construction and decarbonisation of buildings.
We also remain confident in our ability to further improve our market
positions, and to continue to improve our profitability when market conditions
recover.

 

1.      Like-for-like is defined as sales per working day in constant
currency, excluding completed acquisitions and disposals

2.      Underlying represents the results before Other items. Other items
relate to the amortisation of acquired intangibles, impairment charges,
profits and losses on agreed sale or closure of non-core businesses and
associated impairment charges, net operating profits and losses attributable
to businesses identified as non-core, net restructuring costs, and other
non-underlying profits or losses.

3.      Company collated analyst expectations is for Full Year 2023
underlying operating profit (EBIT) of £74.2m, within a range of £65.3m to
£84.0m, as at 4 July 2023

 

Contacts

 SIG plc                                           +44 (0) 114 285 6300 / ir@sigplc.com
 Gavin Slark           Chief Executive Officer

 Ian Ashton            Chief Financial Officer
 Sarah Ogilvie         Head of Investor Relations

 FTI Consulting                                    +44 (0) 20 3727 1340
 Richard Mountain

 Peel Hunt LLP - Joint broker to SIG               +44 (0) 20 7418 8900
 Mike Bell / Charles Batten

 Investec Bank plc - Joint broker to SIG           +44 (0) 20 7597 5970
 Bruce Garrow / David Anderson

 

 

LEI: 213800VDC1BKJEZ8PV53

 

This announcement contains inside information for the purposes of UK MAR.
The person responsible for arranging the release of this announcement on
behalf of SIG is Andrew Watkins, Group General Counsel & Company
Secretary.

Cautionary Statement

This document contains certain forward-looking statements concerning the
Group's business, financial condition, results of operations and certain
Group's plans, objectives, assumptions, projections, expectations or beliefs
with respect to these items. Forward-looking statements are sometimes, but not
always, identified by their use of a date in the future or such words as
'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would', 'should',
'expects', 'believes', 'intends', 'plans', 'potential', 'targets', 'goal',
'forecasts' or 'estimates' or similar expressions or negatives thereof.

 

Forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may cause the Group's actual financial condition,
performance and results to differ materially from the plans, goals, objectives
and expectations set out in the forward-looking statements included in this
document.

 

All written or verbal forward-looking statements, made in this document or
made subsequently, which are attributable to the Group or any persons acting
on its behalf are expressly qualified in their entirety by the factors
referred to above. Accordingly, readers are cautioned not to place undue
reliance on forward-looking statements. No assurance can be given that the
forward-looking statements in this document will be realised; actual events or
results may differ materially as a result of risks and uncertainties facing
the Group. Subject to compliance with applicable law and regulation, the Group
does not intend to update the forward-looking statements in this document to
reflect events or circumstances after the date of this document and does not
undertake any obligation to do so.

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