UK's SIG warns on first-half profit as construction slump drags on
Financial Performance and Market Conditions
By DhanushVignesh Babu
First-Quarter Results and Profit Warning
April 30 (Reuters) - British building material supplier SIG warned of lower first-half profit after posting a 5% decline in first-quarter like-for-like sales on Thursday, as unusually poor weather across Europe and a cyclical downturn in construction weighed.
Market Uncertainties and External Factors
Impact of Geopolitical Events
SIG also said that the Iran war has created additional uncertainty over the timing and shape of market recovery across Europe and that it was too early to predict the extent and nature of the potential impact on its business.
Rising Input Costs
The company flagged that recent increases in oil and gas prices were driving additional input costs in the near term, although it expects to pass these through to customers.
Current Market Demand and Trading Outlook
Construction Sector Trends
"Demand in most markets remains well below historical levels, with European construction experiencing a protracted cyclical low," the company said in a statement.
Signs of Improvement
However, SIG said that trading started to improve from March, with the like-for-like decline expected to narrow to 2-3% in March and April combined, an improvement compared with the first quarter as a whole.
Financial Health and Share Performance
Cash Flow and Liquidity
The company also said that cash flow in the three months to March 31 was ahead of its plan, forecasting healthy liquidity throughout the year.
Stock Market Reaction
Shares in the Sheffield-based firm were up 4.9% in early trading at 8.08 pence.
Analyst and Management Commentary
Analyst Perspective
"The first quarter has been tough, but SIG has continued to make progress on its self-help measures, growing market share and managing its cash flow tightly," Peel Hunt analysts said.
Management Changes
New Finance Chief Appointment
SIG on Thursday also appointed Simon Kesterton, former CFO of infrastructure and construction group Kier, as finance chief, succeeding Ian Ashton, whose departure was announced earlier this month.
(Reporting by DhanushVignesh Babu in Bengaluru; Editing by Mrigank Dhaniwala and Christopher Cushing)
