REG - SIG PLC - Trading Update

SIGAnnouncement

29/04/2022 07:00

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RNS Number : 7851J  SIG PLC  29 April 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU WHICH IS PART OF DOMESTIC UK LAW PURSUANT TO THE
MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). UPON
THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED
IN UK MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

 

29 April 2022
 
 
 

SIG plc

Strong start to 2022; significantly increased full year expectations

 

SIG plc ("SIG", or "the Group") today issues a trading update for 1 January
2022 to date ("the period"), in advance of its Annual General Meeting, which
is being held on 12 May 2022.

 

Key Points

·    Group expected to deliver full year performance significantly ahead
of previous expectations

·    Underlying operating margin for 2022 now anticipated to reach 3%

·    Positive free cash flow now forecast in 2022

 

Trading Summary

The Group has made a strong start to the year, with the Return to Growth
strategy continuing to deliver excellent progress across the business. In
addition to robust demand, we have seen further impetus to sales and profit as
a result of continuing input cost inflation.

 

Group sales were 25% up on 2021 for the quarter to 31 March on a like for like
("LFL")( )(1) basis. This represented a performance well ahead of previous
expectations, with this momentum continuing into the month of April to date.

 

 1 January to 31 March                     LFL Sales Growth                          %    £'m
 vs 2021
 UK Interiors                                                                        26%  162
 UK Exteriors                                                                        19%  109
 UK                                                                                  23%  271

 France Interiors                                                                    10%  51
 France Exteriors                                                                    21%  106
 Germany                                                                             20%  105
 Poland                                                                              63%  55
 Benelux                                                                             17%  26
 Ireland                                                                             78%  27
 EU                                                                                  27%  370

 Group                                                                               25%  641

 

Reported Group sales were 27% up on 2021 for the quarter, with acquisitions
adding 4% to the LFL result referenced above, offset partially by movements on
working days and exchange rates.  Including the acquisitions, the reported UK
Interiors growth rate was 45%.

 

The overall impact of inflation is estimated to have added c19% to Group
growth over the period, albeit the levels have varied across the different
operating companies. This reflects the annualisation of input cost inflation
experienced in the second half of 2021, as well as further increases in early
2022 as our suppliers have passed on steeply increasing energy costs in
manufacturing. There remain some constraints in supply across the business,
but these are continuing to abate, as previously reported.

 

Outlook

Given the strong momentum seen through the early part of 2022, together with
increasing visibility on the near-term trading outlook, the Board now expects
the Group to deliver a full year performance significantly ahead of previous
expectations.

 

Input cost inflation is currently higher than previously anticipated, as noted
above, and expected to remain elevated in the near term. We expect that the
resulting increase in revenue will more than offset any localised market
softening.

 

In addition, we are confident that we will be able to maintain and build on
the strong margin discipline that has been an important part of the recent
progress made by the Group, with underlying operating margin for 2022 now
expected to reach 3%.  Furthermore, we now expect the Group to be cash
generative in 2022.

 

Steve Francis, Chief Executive, said:

"The first four months have seen markedly stronger growth than anticipated,
driving positive margin momentum across all our countries of operation. Our
decentralised model, with 433 branches in seven countries providing strong
local specialist expertise and superior stock availability, continues to gain
ground and to show resilience in market conditions that remain challenging.
Demand for our sustainable construction offerings remain strong. The three
acquisitions made during the last 18 months are performing well and this is an
area of increasing strategic focus for us.

"Although it is relatively early in the year, and notwithstanding the current
macro-economic and geo-political environment, the strength of our recent
trading gives us the confidence that we will now reach our initial margin
target of 3% and return to cash generation this year, ahead of schedule."

 

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

 

 

Contacts

 SIG plc                                                     +44 (0) 114 285 6300
 Steve Francis       Chief Executive Officer
 Ian Ashton          Chief Financial Officer

 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

 Jefferies International Limited - Joint broker to SIG       +44 (0) 20 7029 8000
 Ed Matthews / Will Soutar

 

The person responsible for arranging the release of this announcement on
behalf of the Company is Andrew Watkins, Group General Counsel & Company
Secretary.

 

Cautionary Statement

 

This announcement does not constitute an offer of securities by SIG plc. This
announcement may include statements that are, or may be deemed to be,
forward-looking statements. By their nature, forward-looking statements
involve risks and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and may be beyond the
Group's ability to control or predict. Forward-looking statements are not
guarantees of future performance. You are advised to read the section headed
'Principal risks and uncertainties' in the Group's Annual Report and Accounts
for the year ended 31 December 2021 for a further discussion of the factors
that could affect its future performance and the industry in which it
operates.  Other than in accordance with its legal or regulatory obligations,
SIG plc does not accept any obligation to update or revise publicly any
forward-looking statement, whether as a result of new information, future
events or otherwise.

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