The UK has been the source of troubles at SIG (SHI) for some time now. Anxieties over Brexit added to a challenging domestic trading environment, particularly in the home improvement market, exacerbated by bad weather at the start of the year. So like-for-like revenues in the UK and Ireland were down 2.3 per cent during the first half, but the combination of locales masked a strong performance in the Irish business, which improved sales by 9.7 per cent.
Following a strategic review, management is attempting to improve the gross margin while reducing operating costs, working capital and leverage. The group has disposed of a number of non-core businesses and progress is being made, with net debt now at 1.8 times cash profits, from 2.3 times last year and return on capital employed (ROCE) up 140 basis points to 9.2 per cent.
Accounting treatment was also to the fore. Earlier in the year, management at the construction materials supplier uncovered a historical overstatement of profit, cash and trade payables, which has led to a restatement of 2017 statutory figures. The adjusted figures are considerably less flattering, with operating profit down 17.7 per cent.
Broker Peel Hunt revised down its forecasts for the full year, and now expects adjusted pre-tax profit of £80m, giving EPS of 10.1p (from £79.2m and 9.8p in 2017).
| SIG (SHI) | ||||
| ORD PRICE: | 119p | MARKET VALUE: | £ 704m | |
| TOUCH: | 119-119.3p | 12-MONTH HIGH: | 180p | LOW: 115p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 80p* | NET DEBT: | 37% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 (restated) | 1.44 | -15.8 | -3.5 | 1.25 |
| 2018 | 1.38 | 19.9 | 2.5 | 1.25 |
| % change | -4 | - | - | |
| Ex-div: | 4 Oct | |||
| Payment: | 9 Nov | |||
| *Includes intangible assets of £357m, or 60p a share | ||||
