SIG did well to tread water in the first half, given the tough economic climate and the wettest second quarter on record. And, after stripping out exceptional items, operating profits came in just 6 per cent lower at £40.9m. However, underlying operating margins were maintained at 3.2 per cent, and another dose of self help – mainly through rationalising its branch network – is expected to yield annual cost savings of £7m next year. But, for now, the shares look up with events rated on 10.5 times Peel Hunt's full-year adjusted EPS estimate of 9.2p (9.4p for 2011).
Revenues in mainland Europe, which accounts for over half of group turnover, dropped 5 per cent as higher sales in France and the Benelux region were offset by weakness in Poland and Germany. In the UK and Irish operation, weakness in housing construction and public sector construction activity meant sales fell 2.2 per cent to £578.3m, but underlying operating profits were maintained at £23.1m due to margin improvement. SIG is well positioned to benefit from government initiatives to upgrade energy efficiency, although chief executive Chris Davies conceded that the Green Deal initiative is unlikely to come into effect until later next year.
| SIG (SHI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 97p | MARKET VALUE: | £573m | |
| TOUCH: | 96-97p | 12-MONTH HIGH: | 125p | LOW: 75p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 37 | |
| NET ASSET VALUE: | 119p* | NET DEBT: | 19% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.40 | -0.6 | 0.30 | 0.75 |
| 2012 | 1.29 | 25.2 | 2.90 | 1.00 |
| % change | -8 | – | +867 | +33 |
Ex-div: 10 Oct Payment: 7 Nov *Includes intangible assets of £477m, or 80p a share | ||||
