SIG's (SHI) core business of insulation and roofing materials fell foul of the extended winter weather earlier this year, in a UK and European construction market that was already in the doldrums. So restricting the contraction in first-half underlying pre-tax profits to a 15 per cent decline, from £35.5m to £30.2m, was a creditable achievement. Moreover, turnover was broadly maintained, while prompt action to reduce costs will generate additional annual cost savings of £3.9m, albeit at a one-off cost of £5.6m. A pension credit and lower restructuring charges at the same stage last year explains the greater fall in the reported profits in our table.
Sales in mainland Europe - which accounts for just over half of group turnover - fell by 0.7 per cent to £692m, although the construction market declined at a much faster rate. Like-for-like sales in France, for example, fell by 4.5 per cent against a market decline of 8.1 per cent. Trading in the UK was hit by termination of the government's carbon emission reduction target (CERT) and a slow start-up by its Green Deal replacement, which meant sales in the energy management business more than halved. This left UK sales 2.3 per cent lower on a like-for-like basis at £554m, while gross margins slipped from 26.4 per cent to 26 per cent.
Panmure Gordon is forecasting flat full-year adjusted pre-tax profits of £85m and EPS of 10p (from £84.1m and 9.7p in 2012).
| SIG (SHI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 182p | MARKET VALUE: | £1.08bn | |
| TOUCH: | 182-183p | 12-MONTH HIGH: | 188p | LOW: 94p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 55 | |
| NET ASSET VALUE: | 124p* | NET DEBT: | 19% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.29 | 25.2 | 2.90 | 1.00 |
| 2013 | 1.28 | 13.1 | 1.70 | 1.15 |
| % change | -1 | -48 | -41 | +15 |
Ex-div: 9 Oct Payment: 7 Nov *Includes intangible assets of £496m, or 84p a share | ||||
