It wasn't all plain sailing for insulation and roofing materials group SIG (SHI) in the first half. Just under half of group sales are generated in continental Europe and growth there was lacklustre. Furthermore, any profits from increased European sales were hit by the strength of the sterling. However, trading in the UK and Ireland was rather better and sales there grew 11.3 per cent on a like-for-like basis.
In fact, and after adjusting for exceptional items, underlying operating profit grew 21 per cent year-on-year to £47.8m. This pushed the underlying gross margin ahead by 40 basis points to 26.8 per cent, while the post-tax return on capital employed rose from 8.3 per cent to 10 per cent. Nearly all the improvement reflected higher volumes on the back of new housebuilding and there are also signs of a revival in non-residential construction.
The group completed three small acquisitions in the period, too, with three more deals in the first month of the second half. Further bolt-on purchases are expected, with acquisition expenditure targeted at £30m-£50m.
Broker N+1Singer expects adjusted full-year pre-tax profit of £100m, giving EPS of 11.9p (from £88.1m and 10.4p in 2013).
| SIG (SHI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 172p | MARKET VALUE: | £1.02bn | |
| TOUCH: | 171-172p | 12-MONTH HIGH: | 219p | LOW: 164p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | na | |
| NET ASSET VALUE: | 113p* | NET DEBT: | 20% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 1.28 | 13.1 | 1.7 | 1.15 |
| 2014 | 1.31 | 11.8 | 3.1 | 1.42 |
| % change | +2 | -10 | +82 | +23 |
Ex-div: 8 Oct Payment: 7 Nov *Includes intangible assets of £455m, or 77p a share | ||||
