TIDMSHI
RNS Number : 0141Z
SIG PLC
09 January 2024
9 January 2024
SIG plc: 2023 Full Year Trading Update
SIG plc ("SIG", or "the Group"), a leading supplier of
specialist insulation and building products across Europe, today
issues a trading update for the year ended 31 December 2023
("FY23").
Highlights
-- FY23 results reflect continued strong execution, against a challenging market backdrop
-- Full year like-for-like(1) ("LFL") sales down 2% on the prior
year, with revenues of GBP2.76bn
-- Underlying operating profit (2) expected to be in the upper
half of the guidance range of GBP50m to GBP55m provided
previously
-- Positive free cash flow (3) of cGBP4m expected for the year
-- Restructuring and productivity initiatives completed in H2
2023 will deliver approximately GBP10m of annualised cost savings,
the majority of which will benefit FY24
-- Increased strategic focus on specialist businesses and operational execution across the Group
Summary
The Group has managed effectively the impact of increasingly
challenging market conditions through the year, delivering robust
trading results relative to the market. As anticipated and reported
in our October 2023 trading update, demand softened in most of our
geographic markets in the second half. Despite this, we continued
to benefit from execution of our commercial strategy, retaining a
strong focus on customer service across our branch network and
ensuring we maintained strong momentum.
Subject to audit, the Board expects to report FY23 revenues of
GBP2.76bn , and underlying operating profit in the upper half of
the guidance range of GBP50m to GBP55m provided in October.
The Group expects to report a modest free cash inflow for the
year of cGBP4m, helped by solid working capital management, with
year-end gross cash balances of around GBP132m (2022: GBP130m). The
movement in cash balances in the year reflects the free cash flow,
partially offset by small currency movements and deferred
acquisition costs. The Group's revolving credit facility ("RCF") of
GBP90m remained undrawn as at 31 December 2023.
The Group expects to report net debt as at 31 December 2023 of
cGBP457m on a post IFRS 16 basis (2022: GBP444m), and cGBP154m on a
pre IFRS 16 basis (2022: GBP160m). The movement in post IFRS 16 net
debt is due mainly to an increase in lease liabilities of cGBP19m,
mostly a result of market driven inflation, combined with some
investments in new branches. This was partially offset by the cash
movement and a favourable currency movement on bond debt. Leverage
at 31 December 2023 is expected to be around 3.4x and 2.7x on post
and pre IFRS 16 bases respectively.
Trading performance
Reported Group revenues were 1% higher in the year, including
c1% from acquisitions and a c1% positive impact from exchange
rates. LFL revenues declined 2% compared to prior year. Pass
through of input cost inflation added an estimated 5% to revenues
in the full year, 9% in H1 and flat in H2.
LFL growth rates across most geographies dropped in H2, compared
to H1, due to the declining impact of input cost inflation noted
above. Year over year volume declines moderated in H2 as expected,
reflecting weaker comparators in H2 2022. Absolute volumes softened
through the year due to
continued weakening in market demand, reflecting conditions
across the building and construction sector.
LFL sales
growth FY 2023
2023 vs 2022 H1 H2 FY sales
GBPm
UK Interiors 5% (7)% (1)% 557
UK Exteriors 1% 2% 1% 369
UK Specialist
Markets (7)% (5)% (6)% 248
UK 1% (4)% (1)% 1,174
------------------ ------ ------ ------ --------
France Interiors 1% (3)% (1)% 219
France Exteriors 2% (8)% (3)% 458
Germany 0% (2)% (1)% 462
Poland (9)% 5% (2)% 238
Benelux 7% (8)% 0% 117
Ireland (18)% (10)% (15)% 94
------------------ ------ ------ ------ --------
EU (1)% (4)% (3)% 1,588
------------------ ------ ------ ------ --------
Group 0% (4)% (2)% 2,762
------------------ ------ ------ ------ --------
As announced at our Capital Markets Event on 23 November 2023,
and as shown above, we will now report the UK Specialist Markets
business as a separate reporting unit, in line with the new
management structure in place.
In the UK Interiors business, the strategic and operational
changes made since mid-2020 continue to enable the business to
return towards its previous market position, reflected in a robust
performance against the market in FY23. In UK Exteriors, the
performance was also strong relative to the market, driven by
renewed commercial focus and execution under the new structure. The
Specialist Markets business experienced continuing good demand for
its high specification and innovative building solutions, but
revenue was affected by weaker demand in the agricultural and
commercial warehousing and residential new build segments, and by
lower year over year input pricing on steel.
In France, market conditions affected demand, in the Exteriors
business in H2 in particular, but both businesses continue to
execute very effectively on their strategic plans. The German
business continued its robust recovery of the last two years,
performing well in what is currently a very challenging market.
Poland's growth rebounded in the second half, with increased
volumes as well as the impact of some softer H2 comparators.
Benelux has had new management in place since October to address
and improve performance, and Ireland's results reflect an
especially tough market environment in 2023, as previously
reported.
Operating efficiency is a key plank of our medium and long term
margin ambitions. To that end, during the latter part of 2023 we
executed a number of restructuring and productivity initiatives
that will benefit the business in 2024 and beyond. These include a
streamlining of central costs, and a review of operating company
cost structures, most notably in the UK and Ireland. As well as
generating permanent cost reductions of around GBP10m on an
annualised basis, these initiatives will facilitate improved
operational agility and execution.
Gavin Slark, CEO, commented:
"Despite challenging market conditions across the European
building and construction sector, the Group has delivered a robust
trading performance, through a strong focus on our customers and
the great efforts of all our people.
"In my first year as CEO, I have been impressed by the
opportunities that exist within SIG's portfolio for strengthening
our operating performance and accelerating our specialist
businesses, and for delivering more profitable growth over the
medium term. Whilst we expect continued softness in market
conditions in 2024, we are confident in our ability to manage
through this current phase of the cycle and to continue to
strengthen our operations, ready to take advantage of the
significant long-term opportunities for the Group as markets
recover."
FY23 Results date, and Outlook
We will publish our full FY23 results on 5 March 2024, and will
hold a presentation and conference call for analysts and investors
at 10.00am (GMT) on that date. We will provide a more detailed
outlook on 2024 at that time.
The numbers in this update remain subject to final close
procedures and to audit.
1. Like-for-like is defined as sales per working day in constant
currency, excluding completed acquisitions and disposals
2. Underlying represents the results before Other items. Other
items relate to the amortisation of acquired intangibles,
impairment charges, profits and losses on agreed sale or closure of
non-core businesses and associated impairment charges, net
operating profits and losses attributable to businesses identified
as non-core, net restructuring costs, and other non-underlying
profits or losses.
3. Free cash flow is defined as all cash flows excluding M&A
transactions, dividend payments, and financing transactions.
Contacts
SIG plc +44 (0) 114 285 6300 /
ir@sigplc.com
Gavin Slark Chief Executive Officer
Ian Ashton Chief Financial Officer
Sarah Ogilvie Head of Investor Relations
FTI Consulting +44 (0) 20 3727 1340
Richard Mountain
Peel Hunt LLP - Joint broker to
SIG +44 (0) 20 7418 8900
Mike Bell / Charles Batten
Investec Bank plc - Joint broker
to SIG +44 (0) 20 7597 5970
Bruce Garrow / David Anderson
LEI: 213800VDC1BKJEZ8PV53
Cautionary Statement
This document contains certain forward-looking statements
concerning the Group's business, financial condition, results of
operations and certain Group's plans, objectives, assumptions,
projections, expectations or beliefs with respect to these items.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would',
'should', 'expects', 'believes', 'intends', 'plans', 'potential',
'targets', 'goal', 'forecasts' or 'estimates' or similar
expressions or negatives thereof.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the Group's actual
financial condition, performance and results to differ materially
from the plans, goals, objectives and expectations set out in the
forward-looking statements included in this document.
All written or verbal forward-looking statements, made in this
document or made subsequently, which are attributable to the Group
or any persons acting on its behalf are expressly qualified in
their entirety by the factors referred to above. Accordingly,
readers are cautioned not to place undue reliance on
forward-looking statements. No assurance can be given that the
forward-looking statements in this document will be realised;
actual events or results may differ materially as a result of risks
and uncertainties facing the Group. Subject to compliance with
applicable law and regulation, the Group does not intend to update
the forward-looking statements in this document to reflect events
or circumstances after the date of this document and does not
undertake any obligation to do so.
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END
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