SIG identifies further cost savings

23rd Aug 2012 07:57

Building materials distributor SIG saw sales slip slightly in the first half as it was hit by the shaky economic conditions and bad weather.Profits were also lower than last year but the group said that it has identified further cost savings for next year.Revenue slipped from £1,343.7m to £1,292.6m on the back of a 1.9% decline in volumes and exchange rate movements. SIG's performance "was affected by a weakening macro economy, adverse weather conditions in Mainland Europe in February and the wettest Q2 on record in the UK."Underlying pre-tax profit from continuing operations was £34.7m, down 2.0% from £35.4m, while the underlying basic earnings per share from continuing operations fell 2.4% from 4.1p to 4.0p. Statutory pre-tax profit was £25.2m, compared with a loss of £0.6m the year before.The firm said it kept tight control of its operating costs in the first half with underlying cost inflation in its existing perimeter increasing by only 1.0%, below its target of 2%. The group realised £2.5m of the £5.0m of cost savings identified for 2012 relating the rationalisation of its branch network. "Given prevailing market conditions, the Group has continued to keep its cost base under review and is targeting further annual operating cost savings of £7m in 2013," the firm said.The gross margin in continuing operations improved from 25.4% to 25.9%. The interim dividend per share was raised from 0.75p to 1.0p.Chief Executive Chris Davies said: "Like-for-like sales so far in H2 have been in line with prior year, following a slight decline in May and June, with little discernible effect from the Olympics on our UK operations. "Our outlook remains unchanged from that indicated in our trading update in July.  We continue to expect market volumes to decline slightly this year and against this background are focused on improving the group's performance, outperforming our markets and implementing further self-help measures." Net debt at June 30th fell £32.9m year-on-year to £129.9m, but this was £14.0m higher than levels recorded on December 31st partly due to normal seasonal movements in working capital.