SIG drops on margin concerns, as it posts jump in first-half profit

11th Aug 2015 07:46

(ShareCast News) - SIG fell despite posting a rise in first-half pre-tax profit and raising its interim dividend, after the building materials company said its margins were under pressure.Pre-tax profit for the six months ended 30 June came in at £26.8m from £11.8m in the first half of 2014 as continued progress on strategic initiatives and a fall in exceptional costs offset variable trading conditions in Europe, and a significant weakening of the euro which pushed revenue down to £1.24bn from £1.31bn.Exceptional costs fell to £12.3m from £31.2m a year earlier and the company lifted its interim dividend by 19% to 1.69p. Despite the solid first-half performance, investors were concerned by the company's forward-looking comments on margins.Chief executive Stuart Mitchell said: "The first stage of the group's business transformation programme, to improve procurement, is increasingly embedded within SIG and delivering significant savings. The next stage, a review of our supply chain, is progressing well with findings to be presented towards the end of this year. "Our outlook for the year is broadly unchanged although underlying market conditions are resulting in margin pressure, which will offset some of the benefit from our Strategic Initiatives. Assuming the improving sales trend in Mainland Europe continues we expect to make year-on-year progress, with results H2 weighted as anticipated."At 1054 BST, SIG shares were down 3.5% at 194.30p.