SigmaRoc reports 'resilience' as markets start to recover

Construction materials company SigmaRoc updated the market on its trading for the first five months of 2020 on Tuesday, reporting unaudited revenues of £42m for the year to 31 May.

The AIM-traded firm said that represented 84% of revenues for the same period in 2019 on a like-for-like basis, adjusting for subsequent acquisitions.

Comparing pro-forma monthly performance to the prior year, SigmaRoc said group revenues tracked at 60% in April, and recovered to 98% in May.

As a result, each platform within the group, and the group itself, was EBITDA positive for each month of the year-to-date.

Operationally, SigmaRoc said it had “rigorously” implemented government-recommended health and social distancing protocols across all of its operating regions.

As a result, it said it could continue to operate at the majority of its operations, and serve customers and pay suppliers through the Covid crisis.

Across the months of April and May, restrictions in the Channel Islands were lifted, allowing the Ronez operations to resume more normal trading, although against a backdrop of “somewhat reduced” activity in road contracting in Guernsey and certain major projects in Jersey.

In the UK, the group's PPG and South Wales platforms scaled up towards full production at the end of April and into May, as RMI and housing demand recovered.

The firm said the supply of large-scale precast concrete products for infrastructure projects helped the PPG platform deliver decent results.

South Wales relied more heavily on the reopening of local road and civil engineering schemes, which gradually happened across May.

Operations in Belgium remained active through April, although at a lower activity level.

Production activity there returned to full capacity in May, as order books recovered to standard run rates.

By the end of May, shipments of dimension stone materials from Belgium had returned to pre-Covid levels, and aggregate supplies resumed with the reopening of its partner's operations in that month.

As a result of its trading performance and cash management strategies, SigmaRoc said its cash position increased to £13.5m from £11m during the two months to 31 May, while its long-term debt position remained “largely unchanged”.

SigmaRoc said its adjusted leverage ratio, which was about two times underlying EBITDA on 31 March, was expected to remain “at similar levels” when covenant tests are calculated on 30 June.

The company said it retained the ability to draw further bank funding within its existing facilities, but did not currently expect to do so.

SigmaRoc’s board said providing accurate guidance for the rest of the year would be “premature”, explaining that too many uncertainties remained in terms of future demand for construction materials in its key markets, as well as the state of the wider economy.

However, it noted that the resilience of the business through April, together with the recovery in activity levels during May, gave the directors confidence that the firm would be able to “manage effectively” through the crisis, and maintain progress in its growth strategy.

“I am very pleased to be reporting relatively strong results in a time of great uncertainty,” said chairman David Barrett.

“The whole economy has felt the heavy impact the Covid-19 crisis has brought with it and so have we.

“However, our business model and management team have allowed us to respond quickly and effectively. I believe this further demonstrates the strength of our strategy and its implementation.”

At 1309 BST, shares in SigmaRoc were up 3.59% at 42.99p.