SIG PLC, the building materials distributor and roofing merchants has issued its results for the 6 months to 30 June 2021.
It reports that its ‘Return to Growth’ strategy is gaining momentum as the UK returns to profit and France and Poland have delivered record first halves.
As a group, the company’s like-for-like H1 sales are up 33% on 2020 and 1% up on 2019. Group sales excluding the UK Distribution business are up 8% on 2019.
The interim report lays bare the difficult year SIG UK had in 2020. While its Exteriors roofing merchant business has now recovered sales which are up £27m on 2019 with an underlying operating profit of £7.9m compared to H1 2020’s £8.6m loss, the Distribution side of the business remains in loss, £56m down in sales on the 2019 pre-pandemic levels. However, Distribution has shrunk its underlying operating loss to £5.4m, compared to H1 2020’s £27.4m loss. Chief Financial Officer, Ian Ashton says all of the business is expected to show recovery to pre-pandemic sales volumes in H2 by the time of the end of year report.
Steve Francis, SIG CEO says the UK business is now benefiting from re-hiring former employees and their experience to rebuild margins and improve supplier terms and rebates. The decentralised branch model is helping to allow branch pricing and a more profitable product mix. Digitisation is being prioritised with the hiring of a digitisation director and there is a pipeline of acquisitions that is now beginning to ‘mature’.
While supplier rebates improved with increased sales, the SIG group has been able to maintain and slightly improve its gross margin which was 25.9% in H1, 100bps higher than H1 2020.
SIG says the impact of material shortages and cost price inflation is being successfully managed, with minimal impact in H1 and only a slight increase in inventory across the Group to help iron out supply disruption. However, the business is cautious about the outlook for the rest of the year with materials shortages not expected to resolve this year and cost inflation expected to continue.
Overall, SIG reported a £13.6m underlying operating profit in H1 with underlying profit before tax of £3m. Profits are expected to rise in the second half of this year and full year underlying operating profit is anticipated to be ahead of prior expectations.