Operating profits have fallen at building materials specialist SIG as it points to weak and uncertain demand among its customers.
The Sheffield-based insulation specialist has also been facing cost inflation as statutory operating profit was £30m in the six months to the end of June, compared with £39.8m in the same period last year. That came despite higher revenues of £1.42bn in the first half thanks to the impact of acquisitions and exchange rate gains, against £1.35bn in 2022. Operating costs also jumped £18.9m, driven by wages, property and energy.
SIG told investors there had been weaker residential and commercial construction project demand in France in May and June, but it nonetheless saw sales growth in the country. Meanwhile weaker activity in new build markets, including commercial property projects, impacted performance in Germany.
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Conditions were also weaker across the firm's Polish and Irish operations, against strong comparators in 2022. Meanwhile, in the º£½ÇÊÓƵ, SIG's interiors business experienced weaker demand from residential developers as commercial and public sector build projects were less impacted.
On the back of the results the firm maintained a downgraded profit forecast introduced in July which pointed to expected underlying operating profits of around £33m.
Gavin Slark, SIG chief executive officer, said: "Our performance in the first half reflects the challenging market conditions we are currently facing, with the group's like-for-like revenue growth flat year-on-year. Despite these conditions, I'm very pleased with the progress we are making on many fronts to improve the business, notably with the initiatives across our operating companies to improve our ability to drive higher levels of profitable growth when market conditions recover. In the first half these initiatives reflected a continuing focus on our people, our branches, and our productivity, creating a platform that will allow us to capture and maximise the significant opportunities I see for the medium term.
"Looking ahead, while we expect market conditions in the second half to remain difficult, we remain confident the business will grasp the opportunities it has to continue to improve its underlying operational performance. This will, in turn, deliver higher levels of profitability as we drive towards our medium-term margin target of 5%. The group is financially and commercially well placed to drive meaningful shareholder value in the medium and long term."
