# SIG plc made further progress in H1 2019

- Link: https://www.directorstalkinterviews.com/sig-plc-made-further-progress-in-h1-2019/412792227
- Published: 2019-09-06T07:22:12+01:00
- Author: Amilia Stone

**SIG plc **(LON:SHI) is a leading supplier of specialist building materials to 
trade customers across Europe, with strong positions in its core markets as a specialist
distributor of insulation and interiors products, a merchant of roofing and exteriors
products, and a provider of air handling solutions.  The Group have today issued
its results for the six months ended 30 June 2019.

**Highlights**

·     Further operational and financial progress in the first half, despite falling
construction activity, particularly in the UK

·     Underlying PBT, pre IFRS 16, up 20% to £30.0m (H1 2018: £25.1m) and underlying
earnings per share, pre IFRS 16, up 23% to 3.7p (H1 2018: 3.0p), both in line with
the Board’s expectations

·     As previously announced, like-for-like sales down 3.8% reflecting weaker market
conditions and focus on profitability over volume

·     Transition to smaller, more profitable base of business in SIG Distribution
largely complete

·     Gross margin up 70bps and operating costs lower.  Group underlying operating
profit, pre IFRS 16, up to £36.5m (H1 2018: £33.0m)

·     Net debt, pre IFRS 16, down to £158.2m (H1 2018: £176.1m) and headline financial
leverage, pre IFRS 16, down to 1.4x (H1 2018: 1.8x).  Further improvement anticipated
in H2 2019

·     Previously announced review of strategic options for Air Handling division
well advanced

·     Interim dividend of 1.25p per share (H1 2018: 1.25p)

·     Continuing transformation and the Group’s normal seasonality are expected 
to deliver a stronger second half, although political and macro-economic uncertainty
continue to increase

> **Commenting, Meinie Oldersma, Chief Executive Officer, said**:
> “We made further progress in H1 2019, demonstrating our ability to deliver a sustained
> improvement in the operational and financial performance of SIG.  Underlying profit,
> return on sales and return on capital employed all improved, and we further reduced
> net debt and headline financial leverage.
> We continue to deliver increases in gross and operating margins in our UK businesses
> and have largely completed the transition to a smaller, more focused base of business
> in SIG Distribution.  We continue to roll out transformational initiatives across
> our businesses in Mainland Europe, which we expect to result in further upside
> over the next twelve months.  We remain on track to deliver our medium term targets.
> In addition, we continue to strengthen our balance sheet.  We have almost halved
> net debt since the start of 2017, with further improvement anticipated in the 
> second half from continuing reductions in levels of working capital and the receipt
> of proceeds from the previously announced disposal of WeGo FloorTec.  There remains
> one further business, previously identified as peripheral, under review.  Accordingly,
> we believe our medium term target of headline financial leverage below 1.0x is
> within reach.
> Our previously announced review of strategic options for the Air Handling division
> is well advanced.  A further update will be provided when appropriate.
> The significant improvements in the business during the first half of 2019 have
> been made against a backdrop of challenging trading conditions in many of the 
> Group’s end markets.  There has been a marked deterioration in the level of construction
> activity in the UK as the year has progressed and a number of key indicators are
> pointing to further weakening of the macro-economic backdrop, notably in the UK
> and in Germany.
> We continue to see benefits from transformational initiatives across the Group’s
> businesses.  Coupled with the Group’s normal seasonality, these are expected to
> deliver further upside in the second half of the year.  However, political and
> macro-economic uncertainty continues to increase as we enter the traditionally
> strongest trading months of the year.  We continue to monitor trading conditions
> closely and we are taking actions in anticipation of further market weakness.”

**Analyst presentation (9am today)**

A briefing to analysts will take place today at 9am at the offices of Peel Hunt 
LLP, Moor House, 120 London Wall, EC2Y 5ET.  A live webcast of the presentation 
will be on [www.sigplc.com](http://www.sigplc.com/), a recording of which will also
be available later in the day.

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