Building products supplier SIG says softening demand across key European markets means half year profits are likely to be at the lower end of expectations.
The Sheffield-based firm saw flat like-for-like revenue at £1.4bn in the six months to the end of June as fewer sales were partly offset by price inflation. Amid a turnaround plan, the London Stock Exchange-listed specialist in insulation products said demand was notably softer in the last two months, particularly in France and Germany.
Bosses said underlying operating profits of about £33m - towards the lower of estimates - are expected as it remained uncertain as to when demand may pick up. Some of the weaker performance had been offset by productivity initiatives introduced as part of a turnaround that last year's results showed to be successful.
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Within its trading update, SIG said sales and market conditions had been weaker in Poland and Ireland for the entire six months - a trend that was expected to continue throughout the rest of the year, tempered by price increases.
The firm said: "Whilst trading in recent weeks leads us to be more cautious as to the timing of any broad-based improvement in demand conditions, the second half will benefit from ongoing productivity initiatives as well as an expected profit on one specific property move. Consequently, the board continues to expect the group to deliver full year underlying operating profit within the current range of market expectations, but towards the lower end of that range.
"Notwithstanding short-term market weakness, we continue to progress the strategic and operational initiatives which underpin our ambition for the Group. As a European market leader in the supply of specialist insulation, and with 80% of the group's sales covering insulation and the wider building envelope, we are well-positioned to benefit from long-term structural growth drivers, notably sustainable construction and decarbonisation of buildings. We also remain confident in our ability to further improve our market positions, and to continue to improve our profitability when market conditions recover."
