SIG knocked by weak UK construction

SIG’s underlying revenue in its UK and Ireland business slid by 13 per cent over the period to £515m, with the picture having worsened over the second quarter. The decline in UK construction activity has persisted beyond SIG’s first half, with the IHS Markit/CIPS UK Construction Purchasing Managers' Index this month noting four consecutive monthly drops in output. Chief executive Meinie Oldersma has not observed a significant amount of new building work in the UK over the past 12 to 18 months. “We’re delivering on things that are in flight,” he said, “not delivering on things that are starting up new.” Weak German business confidence also proved challenging, but to a lesser extent.

The company’s internal picture is more promising. Its net debt is 10 per cent lower than at this time last year, owing to increased trading cash flow and falling working capital levels. SIG’s Air Handling business, which was hit by a ransomware attack in April, remains under review. The company is open to disposing of the business and aims to have reached a decision on Air Handling by the end of its financial year.

House broker Peel Hunt cut its respective full-year 2019 pre-tax profits and earnings per share forecasts from £84m and 10.6p, respectively, to £80m and 10.1p. It expects these to recover to £91m and 11.4p in 2020.