SIG warns on profits amid deteriorating markets

Building materials group SIG issued a profit warning on Thursday as it pointed to a deterioration in construction markets.

In an update for the year to the end of December 2019, the company said it now expects to report underlying pre-tax profit of around £42m, down from £72.7m the year before and below consensus estimates of £54m.

"The group has been reporting an ongoing deterioration during the year in the level of construction activity in key markets and key indicators continue to point to further weakening, principally in the UK," it said.

"The group has also experienced some challenges in sustaining sales rates during a period of considerable and rapid organisational change. This deterioration in sales accelerated during December, with sales per working day in the month around a quarter lower than November."

Like-for-like revenues fell 6.1% over the year, with revenue from the UK & Ireland down 15.5%, while sales from mainland Europe ticked up 1.2%. SIG distribution sales slumped 21.1% during the year, while SIG Exteriors sales were 8.6% lower.

SIG said the key challenge for 2020 is to deliver a return to top line growth. The company said management is taking a number of actions to address sales performance. This, coupled with profit protection actions taken in recent months and the annualised benefit of the broader transformation, should leave it "well placed to capitalise on any recovery in trading conditions".

At 0806 GMT, the shares were down 17% at 99.20p.