TIDMSHI
RNS Number : 1410F
SIG PLC
14 July 2021
14 July 2021
SIG plc: Continued Strong Trading Momentum and Return to
Profitability
SIG plc ("SIG" or "the Group") today issues a trading update for
the six months to 30 June 2021 ("H1" or "the period"), in advance
of the release of its H1 results on 21 September 2021.
Highlights
-- Strong revenue growth, and an underlying(1) operating profit
of cGBP13.5m, better than previous expectations.
-- Strategy of re-connecting with Customers, Suppliers and
Employees is positioning the Group well, enabling it to take
advantage of both strong near-term demand and healthy long-term
fundamentals.
-- Full year profit outlook raised.
Overview
Revenues in H1 were strong, with like-for-like ("LFL")(2) growth
of 33% compared to the Covid-affected prior year and up 1% against
2019, a more meaningful comparator. This reflects the ongoing
positive impact of the Group's Return to Growth strategy, which is
delivering improved organic sales performance, and has been
supported by continuing robust demand in the repair, maintenance
and improvement ("RMI") segments in most markets. Profitability
improved throughout the period, a result of the normal seasonality
in the business and the improving trading across the Group.
As a result, the Board expects to report H1 revenues from
underlying operations(3) of cGBP1.11bn, and an underlying operating
profit of cGBP13.5m. Both include good progress in the UK, and we
expect the UK business as a whole to be just over break-even at the
underlying operating profit level for H1, ahead of plan.
The Group finished the period with net debt of GBP58m, on a pre
IFRS 16 basis, and with gross cash balances of GBP174m. Reported
net debt on an IFRS 16 basis is expected to be GBP284m. The cash
outflow in H1 is largely as expected, driven by the seasonal
increase in working capital, which was more pronounced than usual
due to the strong trading. In addition, where possible and
appropriate, we have built up modest increases in our inventory
holding levels in light of likely supply challenges in the coming
months.
Trading performance
The Group has remained able to trade safely throughout the
period, working closely and flexibly with employees, customers and
suppliers under the now well established Covid-19 norms.
Prior year comparative growth rates from late March are
distorted by the impact of Covid-19, notably in the UK, Ireland and
France, and hence the table below includes comparisons with both
2020 and 2019.
1 January to 2021 2021 2021
30 June vs 2020 vs 2019 Jan-June
LFL Sales Growth GBP'm
UK Distribution 54% (19)% 244
UK Exteriors
(4) 58% 14% 194
UK 56% (7)% 439
---------------------- --------- --------- ----------
France Distribution 38% 8% 101
France Exteriors 34% 19% 206
Germany 11% 1% 194
Benelux 2% (10)% 47
Poland 22% 20% 84
Ireland 14% (21)% 37
EU 22% 7% 669
---------------------- --------- --------- ----------
Group 33% 1% 1,108
---------------------- --------- --------- ----------
As reported in May, the UK Distribution turnaround, focused on
delivering distinctive expertise and superior local service, is
ahead of plan and shows continued momentum. We remain very
encouraged by the enthusiasm and energy with which our teams have
embraced and driven the new strategy. The business's sales were on
a declining trend throughout 2019 and most of 2020, and hence the
19% drop versus 2019 shown above. We expect the monthly growth
figures vs 2019 to turn positive early in the second half ("H2").
The UK Exteriors business is trading very well, benefiting from the
strong demand environment, growing 14% over 2019.
The French businesses are continuing to perform strongly,
benefiting in particular from strong RMI demand in Exteriors, as
well as the strong foundations built in the business in recent
years. Germany's performance was encouraging, with good growth
throughout the half. We remain confident the Benelux performance
will pick up over coming months following the recent changes made
in its commercial leadership. Our Ireland business was affected by
the significant Government restrictions imposed on construction
from 1 January 2021 to the end of April, and we expect to see
improved growth in the second half.
We are continuing to see shortages of materials in certain
areas, as reported previously, and input price inflation remains
significant in some categories. We have navigated these challenges
with minimal impact to date, despite some longer delivery
times.
Outlook
The return to profitability in H1 was faster and more
significant than previously expected and we exited the first half
with strong demand conditions and the benefits of the Return to
Growth strategy coming through clearly.
The effectiveness of our supply chain management and commercial
agility give us confidence entering the second half, albeit we are
mindful that the potential impact of material shortages could be
more significant should the situation persist for an extended
period. As such, we retain a cautious view of H2 at this stage.
However, p roviding there is no significant disruption in coming
months, we continue to expect H2 to be both profitable and cash
generative, with full year underlying operating profit now expected
to be ahead of previous forecasts.
The numbers in this update remain subject to final close
procedures.
1. 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.
2. Like-for-like ("LFL") is defined as sales per working day in
constant currency, excluding completed acquisitions and
disposals.
3. Underlying operations excludes businesses divested or closed,
or which the Board has resolved to divest or close.
4. UK Exteriors includes the Building Solutions business, as in
the Group's 2020 Annual Report and Accounts.
Contacts
SIG plc +44 (0) 114 285 6300
Steve Francis Chief Executive Officer
Ian Ashton Chief Financial Officer
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
Jefferies International Limited - Joint
broker to SIG +44 (0) 20 7029 8000
Ed Matthews / Will Soutar
Cautionary Statement
This announcement does not constitute an offer of securities by
SIG plc. This announcement may include statements that are, or may
be deemed to be, forward-looking statements. By their nature,
forward-looking statements involve risks and uncertainties because
they relate to events and depend on circumstances that may or may
not occur in the future and may be beyond the Group's ability to
control or predict. Forward-looking statements are not guarantees
of future performance. You are advised to read the section headed
'Principal risks and uncertainties' in the Group's Annual Report
and Accounts for the year ended 31 December 2020 for a further
discussion of the factors that could affect its future performance
and the industry in which it operates. Other than in accordance
with its legal or regulatory obligations, SIG plc does not accept
any obligation to update or revise publicly any forward-looking
statement, whether as a result of new information, future events or
otherwise.
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END
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