SIG profits slump amid weaker UK construction activity

SIG reported a slump in interim profit on Friday, with revenue down amid falling construction activity in the UK and Germany.

The FTSE 250 building materials supplier said revenue came in at £1.3bn, down 5% compared to the year before, while profit before tax slid by 73% to £5.2m after SIG spent £12.2m on restructuring expenses, which included property closure costs, redundancy and staff-related costs, asset write-downs and restructuring consultancy costs.

Underlying profit before tax, which does not include one-off costs, increased by 20% to £30.0m.

Gross margin increased from 26.4% to 27.1% as the company's restructuring saw its UK business transition to a smaller, more focused base of business and a stable average rate of daily sales.

SIG held its interim dividend steady at 1.25p per share.

Chief executive Meinie Oldersma said: "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."

However, SIG said it still expects a stronger second half performance in what are traditionally the strongest months of the year for the group, even as political and economic uncertainty continue to increase.

At 1020 BST, the shares were down 3.9% to 124.10p.