Weakness in the European construction market has led to a fall in like-for-like revenues at building products supplier SIG, though the group says the decline is easing.
New third-quarter trading figures for the Sheffield-based group show a 4% fall in revenue to £662m in the three months to the end of September, compared with the same period last year.
The Yorkshire-based group reported a slight improvement in its UK, Ireland, and Benelux operations, contrasting with a 4% revenue drop to £662 million for the third quarter, year-on-year. This marks a significant sequential improvement from the first half, where like-for-like revenues decreased by 12%.
SIG’s underlying operating profit for the entire year is anticipated to range between £24 million and £27 million, underscoring its resilience in a challenging market environment.
The UK witnessed a 5% decline in like-for-like revenue, while Benelux experienced a 2% decrease. However, Ireland saw an impressive 20% increase in the same metric, indicating regional performance variability.
Despite these mixed results, SIG has emphasized the promising outcomes in its French roofing business, which aligns with broader strategic efforts to stabilise overall performance.
Interestingly, the improvement in Ireland serves as a stark contrast to the stagnation observed in other regions, highlighting SIG’s adaptive strategies in different markets.
SIG successfully launched a German e-commerce platform, reinforcing its commitment to innovation amidst market turbulence.
At the same time, the Polish market presented a 9% decline in like-for-like revenue, attributed to an unexpected slowdown in the non-residential sector during the summer.
Bosses noted, “Whilst weak demand has continued to be a factor in the majority of the group’s markets, the sequential improvement in Q3 was as expected.”
SIG undertook strategic branch closures in the UK, Germany, and France as part of its restructuring programmes, impacting like-for-like performance by approximately 1% in the period.
Efforts to enhance efficiency and reduce costs are expected to underpin better profitability as market conditions improve.
Deflationary impacts moderated further in the third quarter to around 2%, providing some relief amid deflationary pressures.
SIG remarked on a stabilisation in overall volumes, which are down only 1% when excluding the effect of branch closures. This stabilisation is seen as a positive indicator for the future.
Despite the challenging conditions in the European construction sector, SIG’s management remains optimistic about its strategic direction and future profitability.
The company continues to focus on cost-saving measures, efficiency improvements, and leveraging its operational strengths to navigate through market fluctuations.
SIG’s ability to maintain profit expectations amidst a declining sales environment demonstrates a robust underlying business strategy.
The sequential improvement across quarters and regional variances highlights the group’s adaptability and focus on long-term stability.
