Construction Supplier SIG Issues Profit Warning After December Downturn

Written by: Keith Tully

Published: 10th January 2020

An excavatorThe construction sector supply business SIG has issued its second profit warning of recent months after a tough end to 2019.

Sales across the organisation’s UK business declined during the second half of last year by around 19 per cent, despite its European operations generally reporting positive progress during the same period. 

December is understood to have been a particularly difficult month for SIG, which was initially founded as the Sheffield Insulations Group and whose shares have been traded publicly since the late 1980s.

SIG now does business on a very significant scale in France and Germany, as well as in the UK and Ireland, with its main focus being on the supply of products required for insulation, roofing and interiors. 

The business employs around 8,300 people across its operations in the UK, Ireland and mainland Europe.

A number of purchase managers index (PMI) surveys conducted recently indicated that sales were slowing within the UK’s construction sector as a whole during December.

Last month’s General Election and companies closing early in advance of the festive period are both cited as contributing reasons why December saw such a sharp decline in sales for SIG but a downward trend across the sector was in evidence throughout much of 2019.

“The Group has been reporting an ongoing deterioration during the year in the level of construction activity in key markets and key indicators continue to point to further weakening, principally in the UK,” recent trading statements from SIG explained.

“The Group has also experienced some challenges in sustaining sales rates during a period of considerable and rapid organisational change,” it said. 

“This deterioration in sales accelerated during December, with sales per working day in the month around a quarter lower than November.”

Numbers compiled by IHS Markit for its recent PMI survey put the UK’s construction sector on a 44.4 rating for December 2019, with any figure below 50 representing a contraction in likely sales and November’s number clocking in at 45.3.

The PMI numbers from IHS Markit have been showing declines in output for eight consecutive months across the construction sector.

Keith Tully

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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