Revenue and profits continue to fall at SIG
In a trading update, distribution giant SIG plc has reported a 15% fall in revenue in UK and Ireland during 2019, with revenue at its SIG Distribution division collapsing more than one fifth. After a profits warning in October the Board now anticipates underlying profit before tax is likely to fall to c.£42m (2018: £73m). The Group’s shares were down 18% in early trading.
SIG’s trading update for the year ended 31 December 2019 revealed that, faced with continuing deterioration in trading conditions, the management initiated several profit protection measures through the autumn to help offset the impact of the challenging market conditions with most of these delivering financial benefit in 2020, not in 2019 as previously expected.
The Group said there was a 6.1% decline in its like-for-like (LFL) revenues over the year. Group revenues from continuing operations were 7.4% lower in the period, including an adverse 0.8% currency movement and a 0.5% impact from fewer working days. Further reductions in levels of working capital have helped the Group to reduce its net debt to c.£162m (2018: £189m).
The key challenge for the Group in 2020 is to deliver a return to top line growth. Management is taking a number of actions to address sales performance which, coupled with profit protection actions taken in recent months and the annualised benefit of the broader transformation, will leave the Group well placed to capitalise on any recovery in trading conditions.
