SIG in return to profit after cutting costs

But group warns of a tough market

INSULATION FIRM SIG has returned to the black although it warned of challenging market conditions and an uncertain outlook.

The Sheffield-based group reported a pre-tax profit of £28.5m in 2018, up from losses of £55m the previous year after reining in costs and reducing its headcount.

However, revenue declined to £2.7bn from £2.9bn due to challenging conditions in some of its largest markets.

The firm warned that sales are likely to continue to decline in the first part of this year.

Like-for-like sales fell 2.1 per cent and the company expects this trend to continue.

SIG said construction markets across mainland Europe slowed in the second half of last year, particularly in France and Germany where like-for-like sales fell 0.9 per cent and 0.8 per cent respectively.

The group’s chief executive Meinie Oldersma said: “Trading conditions remain challenging, with the outlook in many of our

end markets uncertain, and the group expects continuing likefor-like sales declines in the first part of the year.

“Notwithstanding these headwinds, the margin and cost actions taken in 2018 give us good visibility of further sig- nificant progress in the current year.”

The group said it saw significant operational and financial progress in the second half.

“Despite challenging market conditions and lower revenue in our largest markets, our focus on pricing and profitability over volume, coupled with tighter control over operating costs, has enabled us to grow our gross margins and profit,” said Mr Oldersma.

The company also expects to make further job cuts and is reviewing options for its air handling division, which provides services to improve air quality.

On an underlying basis, pretax profits increased 8.5 per cent to £75.3m.

The company said that the UK construction market, which got weaker during 2018, became increasingly challenging towards the end of the year with commercial construction demand dampened by macro-economic uncertainty, smaller rises in house prices and a slowdown in secondary housing market transactions.

SIG also flagged a slowdown in construction markets across mainland Europe in the second half of the year, particularly in France and Germany.