SIG Reports Smaller Loss Than Expected After Difficult Year

SIG PLC HAS POSTED its results for the year ended 31 December 2020.

The distributor of insulation and interiors products and merchant of roofing and exteriors products, reported an underlying operating loss of £53.3m – less than was expected. Its underlying loss before tax is £76.3m compared to 2019’s £17.7m profit. Revenue for the year was down 12% to £1,872.7m from 2019’s £2,143.0m which it attributes to the impact of the pandemic.

The company has been working to reduce its debt over the last few years which has come down to £4.1m from 2019’s figure of £162.8m. It was helped by the sale of the Air Handling division in January and £152m capital raise in July. However, although the Air Handling sale netted c£148m, it has been excluded from the reported underlying results.

The SIG plc Board did not declare or pay an interim dividend for the 2020 financial year, and nor will a final dividend be declared.

SIG UK Results

In 2020, SIG UK merged its Distribution and Exteriors businesses to create a single UK division, with a combined leadership team replicating a model successfully deployed in SIG France. The company hopes the move will save support function costs. The new regional structure of the combined UK business is focusing on promoting local entrepreneurship, accountability and profit and loss responsibility.

Trading Overview

SIG’s UK business has implemented a ‘Return to Growth’ strategy to relaunch and rebuild its operations. It is focused on reconnecting with customers, suppliers and employees.

The UK business reports a stronger finish to 2020, ahead of expectations with like-for-like sales up 4% in Q4.

However, despite the recovery in sales in the second half of 2020, underlying gross margin was down 80bps to 25.1% due to lower sales volumes over the year. The company says it expects more losses during the first half of this year and a modest profit in H2.

SIG Resilience and Commitment

Steve Francis Group Chief Executive, said, “Our teams have shown great resilience and commitment in the face of the challenging circumstances for much of the year, the effects of which clearly impacted our first half, and hence full year, results.
“I am delighted that due to our Return to Growth strategy we delivered a solid second half and have begun to return the business to growth after a long period of decline.

“The new UK management team has rebuilt its business and, everywhere we operate, we have reconnected with our employees, customers and suppliers. Their response has reaffirmed that we are at our best when we are a local, sales and technical service-driven business, partnering closely with our key suppliers and operating with empowered and entrepreneurial branch teams. That is our strategy for growth and the basis for playing a leading role in our industry in the years to come.”

Building Solutions

The planned sale of SIG’s UK Building Solutions business to Kingspan had been agreed in 2019 and was due to complete in the first half of 2020. However, the sale was halted in May 2020 as terms could not be agreed while the Competition and Markets Authority (CMA) completed its investigation. The SIG Board has decided to retain and develop the business. In 2020, Building Solutions achieved £52m sales.

Outlook

The company identifies continued uncertainty regarding Covid-19, as well as rising input prices and early signs of some potential materials shortages as upcoming threats.

However, it says trading in 2021 to date is in line with management expectations, continuing on a similar trajectory to Q4 2020. The market fundamentals for SIG remain strong, it says and reports benefiting from good RMI growth in UK. The business says it now has the right structure in place for UK Distribution and revenue growth is starting to emerge as planned.