Building materials supplier SIG warns of tough conditions as headwinds buffet construction market
Housing supplier SIG rode out sluggish market conditions and expects to post profits at the upper end of its guidance, as investors hope for an upturn in fortunes this year.
The firm said it expects revenues of almost £3bn in an update published this morning, with profit being between £50-55m, at the upper end of its guidance.
It noted the “challenging market conditions” which has seen a slowdown in housebuilding, and in part contributed to a lack of supply.
This comes after the latest S&P Global/CIPS construction purchasing managers index out this week showed the long-running woes for UK builders continued in December.
The prospect of cooling interest rates combined with hopes of a “soft economic landing”, however, helped restore faith in some of the UK’s biggest house-building groups this week, with Vistry and Crest both seeing a share price bump yesterday.
This morning, however, Unite, which provides student accommodation, reported record demand for beds as the crisis of supply continues.
SIG, which supplies insulation, roofing and other building materials for houses, reported net debt of more than £450m, but this was down on last year’s reporting, marginally.
Its revenues were one per cent up, on the back of acquisitions and exchange rates, but like-for-like revenues were down on the previous year, by two per cent.
Ahead of its full results on 5 March, it said “operating efficiency is a key plank” of its plans, after it “executed a number of restructuring and productivity initiatives” in 2023. This included ‘permanent cost reductions’ of around £10m and a review of cost structures.
Gavin Slark, its chief executive, said: “Despite challenging market conditions across the European building and construction sector, the group has delivered a robust trading performance, through a strong focus on our customers and the great efforts of all our people.
“In my first year as CEO, I have been impressed by the opportunities that exist within SIG’s portfolio for strengthening our operating performance and accelerating our specialist businesses, and for delivering more profitable growth over the medium term.
“Whilst we expect continued softness in market conditions in 2024, we are confident in our ability to manage through this current phase of the cycle and to continue to strengthen our operations, ready to take advantage of the significant long-term opportunities for the Group as markets recover.”