A return to top-line growth at building supplies distributer SIG (SHI) was overshadowed by underperformance in some all-too-important markets. The French construction market remains challenging, Germany continues to disappoint despite improved market conditions and the UK is difficult to predict following the Brexit vote. Considering these geographies make up 88 per cent of overall sales, the future looks pretty murky.
Furthermore, reported revenues were heavily buoyed by acquisitions, currency movements and a higher number of working days in the period. Stripping out these factors, like-for-like sales only rose 0.7 per cent, with marginal boost from price inflation and increased sales volumes.
That said, the group has made strides by implementing strategic initiatives to improve its business performance. Operating margins rose by 30 basis points, boosting operating profit by a fifth to £54m. This was despite acquisition costs and currency movements pushing the underlying cost base up £26m, to £317m. SIG also realised £2.5m of additional profit from the divestment of a number of properties relating to its branch network.
Broker Peel Hunt expects adjusted pre-tax profits of £94m, giving adjusted EPS of 12.2p for the year ending December 2016, up from £87m and 11.2p in 2015.
SIG (SHI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 108.1p | MARKET VALUE: | £639m | |
| TOUCH: | 108-108.5p | 12-MONTHHIGH: | 207p | LOW: 98p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 116p* | NET DEBT: | 34% | |
| Half-year to 30 June | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 1.24 | 26.8 | 3.1 | 1.69 |
| 2016 | 1.38 | 38.4 | 4.8 | 1.83 |
| % change | +11 | +43 | +55 | +8 |
Ex-div: 6 Oct Payment: 4 Nov *Includes intangible assets of £560m, or 95p a share | ||||
