FTSE 250 listed British construction product supplier SIG Plc (LON:SHI) have seen their share price fall in morning trading, with the firm’s recent trading update revealing a decline in on-year sales for the first four months.
Narrow silver lining
SIG are an international supplier of roofing, insulation, commercial interiors and specialist construction materials. The company were able to report that like-for-like sales in their exteriors division had risen 0.4% and sales in mainland Europe were up 2.4%. However, the firm were unable to emulate the bumper sales of their British construction materials counterpart, Travis Perkins (LON:TPK), who booked an impressive first quarter.
“Trading conditions remain challenging and the outlook in many of our end markets remains uncertain, notably in the UK,” SIG said.
To snuff out any reason to celebrate, the company reported that overall like-for-like sales for the four months through April were down 2.6% on-year, revenues form continuing operations had fallen by 3.4% and the adverse 1.3% currency movement this figure includes was only partially offset by a 0.5% improvement from more working days. Distribution comprised the largest cause of weakened revenue, with sales falling 15% on a like-for-like basis.
SIG comments on the recent update
“However, this has been more than offset by the margin and cost actions taken over the last twelve months and as a result, the board continues to expect significantly improved profitability in SIG distribution in the current year,” SIG said in its statement.
“The board believes it can sustain the pace of transformation during 2019 and, providing there is no further deterioration in market conditions, the board remains confident, despite any impact of the French ransomware attack noted above, that the underlying profitability for the full year will be delivered in line with management expectations.”
Notably, the company brought a much lower and more focused base to business in 2019, which was intentional in line with weak market conditions.
The business’s share price has dipped since markets opened, down 0.4p or 0.28% to 143.2p per share. Liberum Capital, Shore Capital and Peel Hunt analysts all reiterated their ‘Buy’ rating on SIG stock, while UBS reiterated their ‘Sell’ stance.