SIG: 'Strong Half Demonstrating Continued Progress'

SIG plc today announces its half year results for the six months ended 30 June 2022. 

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 have been disclosed separately in order to give an indication of the underlying earnings of the Group.

3. H1 2021 restatement is due to the change in accounting policy regarding configuration and customisation costs incurred in implementing cloud computing arrangements following the IFRS Interpretations Committee (IFRIC) Agenda Decision published in 2021. 

Financial highlights

• Strong commercial execution, together with price increases, delivered Group like-for-like ("LFL") sales growth of 21% on prior year, despite some variability in demand
  
  
• Consistent margin progression continues

o  H1 2022 gross margin of 26.2%, 30bps higher than H1 2021 as trading volumes drove higher rebates, coupled with front-end margin improvement in UK, France and Poland

o  Underlying operating profit margin of 3.1%, up 180bps on H1 2021, reflecting price and volume growth in sales more than offsetting inflation in salaries, energy and fuel costs

• Post IFRS 16 leverage reduced over the 12 months from 3.9x to 3.0x (pre-IFRS 16 from 4.2x to 2.1x), with investment and inflationary pressures in working capital more than offset by increase in profitability
  
  
• Robust liquidity, with gross cash of £113m and the revolving credit facility ("RCF") of £50m undrawn at 30 June 2022

Strategic highlights

• Two year strategy of investing for growth has driven sustainable structural improvements across our businesses and, along with pricing tailwinds, has moved the Group back to 3% underlying operating margin, ahead of plan
  
  
• Growth has been delivered across the business; continued strength in France, Poland, Ireland and UK Exteriors; UK Interiors in continuous improvement mode; turnaround well underway in Germany
  
  
• Sustainability drivers continue to benefit the outlook
  
  
• Diversification by geography, end-market, customers and products continue to provide active resilience and flexibility in uncertain market conditions
  
  
• Immediately accretive acquisitions of Miers Construction Products in UK and Thermodämm in Germany, both completed after the period end in July 2022

Outlook

• Market conditions, demand patterns and inflation dynamics have been variable across the Group's geographic and end market segments through the second quarter, and we expect this backdrop to persist in the second half
  
  
• Return to positive free cash flow expected in H2 as seasonal working capital unwinds, with the full year also expected to be positive, although we will remain committed to maintaining product availability and superior service
  
  
• The Board remains confident in delivering its expectations for the full year

Commenting, Steve Francis, Chief Executive Officer, said:

"SIG is a structurally different business to two years ago - more specialist, more local, more productive, more flexible. Over this time, we have delivered above market performance and enabled a rapid return to robust profitability, along with a rhythm of steady progress. The first half of 2022 in particular saw significantly stronger growth than originally planned, which resulted in margin improvement across our operations.

"SIG today is resilient, flexible and sustainable: 80% of our products serve the insulation and building energy efficiency markets. We are by far the largest independent supplier in Europe of these products, which are needed now more than ever.

"Our strong market position, growth strategy and decentralised model will continue to enable us to navigate the pricing environment well and drive market share gains.

"In addition, our scale, diversification and resilience in uncertain markets mean that we are confident both in delivering the Board's expectations for the year and in our growth path to 5% operating margin in the medium term."

Source : SIG Plc

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