SIG swings to profit on lower costs but warns sales will continue to fall
Building supplies firm SIG swung to a profit last year on lower costs but warned that sales are likely to continue to decline in the first part of this year.
The company made a pre-tax profit of £28.5 million in 2018 compared with a loss of £54.7 million the year earlier after reigning in costs and reducing its headcount.
SIG also reduced its debt significantly last year to £189.4 million from £258.7 million.
On an underlying basis, pre-tax profits increased 8.5% to £75.3 million.
However, revenue declined to £2.7 billion from £2.9 billion due to challenging conditions in some of its largest markets.
SIG said construction markets across mainland Europe slowed in the second half of last year, particularly in France and Germany where like-for-like sales fell 0.9% and 0.8% respectively.
Shares were up 8.9% in morning trade at 133.1p.
Like-for-like sales fell 2.1% and the company expects this trend to continue this year.
Chief executive Meinie Oldersma said: “Trading conditions remain challenging, with the outlook in many of our end markets uncertain, and the group expects continuing like-for-like sales declines in the first part of the year.
“Notwithstanding these headwinds, the margin and cost actions taken in 2018 give us good visibility of further significant progress in the current year.”
Mr Oldersma added: “We saw significant operational and financial progress in the second half. Despite challenging market conditions and lower revenue in our largest markets, our focus on pricing and profitability over volume, coupled with tighter control over operating costs, has enabled us to grow our gross margins and profit.”
The company also expects to make further job cuts and is reviewing options for its air handling division, which operates in 10 countries across Europe.