SIG Posts 6.8% Drop In Like-For-Like Sales

SIG plc today announces its half year results for the six months ended 30 June 2024.

Financial highlights

• Group revenue of £1,317m, representing a like-for-like¹ ("LFL") revenue decline of 6.8% versus prior year, reflecting:
  
  o  Prolonged challenging trading conditions in our larger businesses, leading to lower volumes
  
  o  Pricing also down, partly due to modest net input cost deflation  
  
  
• Group underlying operating profit of £11.7m at an operating margin of 0.9%, with effective cost actions mitigating in part the impact of lower sales
  
  
• Disciplined cash management; net debt of £477m post‐IFRS 16 and £179m pre‐IFRS 16, both only marginally up vs prior half year

Operational highlights

• LFL revenue performance reflects challenging conditions in UK Interiors, France and Germany, while Poland and Ireland delivered growth against a stronger local backdrop
  
  
• All businesses continue to perform well relative to their markets, most notably in Germany and UK Roofing
  
  
• Operating margins impacted by the operational gearing effect of reduced volumes and pricing year-on-year
  
  
• Further permanent cost restructuring actions taken in H1 2024 driving reductions in central and operating company overheads, now totalling £15m in annualised savings since H2 2023 (£6m year-over-year saving in H1 2024); total underlying savings in operating costs in the period of £24m vs the prior year, before inflation
  
  
• Continuing progress in all geographies in H1 in improving underlying operational effectiveness and efficiency, and in execution of strategic initiatives expected to drive improved performance over the medium-term

Outlook

• The Group's outlook for FY 2024 remains in line with the recent update published on 24 June: 
  
  o  FY 2024 underlying operating profit expected to be in the range of £20m-£30m
  
  o  Increasing benefits from productivity and cost initiatives underpin continued expectation of a slightly stronger second half   
  
  o  The extent of this H2 improvement is subject to the evolution of demand conditions, particularly given market uncertainties in France and Germany, and recognising the sensitivity of operating profit to relatively small movements in sales
  
  
• The Board remains confident in achieving the Group's operating margin target of 5% in the medium-term

Commenting, Gavin Slark, Chief Executive Officer, said:

"Our results in the first half reflect the prolonged challenging market conditions we are currently facing across most of our European businesses. In light of these conditions, we took further actions to reduce our permanent cost base in the half, which will benefit us in the future.

During the period, we also made further progress on our strategic initiatives to improve our underlying operations and to position us to capture additional growth when markets improve. This has included the launch of a new omnichannel and e-commerce platform for our business in Germany, with France to follow, both of which will enhance future profitability as well as customer experience and convenience. Across all of our operations we are implementing a range of initiatives under our 'GEMS' strategy, which will lead to a higher-value sales mix and will support delivery of our 5% operating margin target. The operational gearing in our business model applies equally strongly in conditions of rising demand, and, accordingly, the Board believes the Group remains well positioned to benefit from the market recovery when it occurs."

Notes

1. Like-for-like ("LFL") is defined as the growth/(decline) in sales per working day in constant currency excluding any current and prior year acquisitions and disposals. Sales are not adjusted for branch openings or closures.

2. Underlying represents the results before Other items. Other items relate to the amortisation of acquired intangibles, net restructuring costs, costs related to acquisitions, cloud based ERP implementation costs and other specific items. Other items have been disclosed separately in order to give an indication of the underlying earnings of the Group.

Source : SIG plc

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