In a trading update this morning distribution giant SIG plc revealed 17% sales growth during the third quarter (Q3compared to same period in 2020. This follows the 33% reported in the first half, a number distorted by the material Covid impact in 2020. Against pre‐Covid 2019 comparatives, Q3 growth was 9%, up from the 1% growth in the first half of 2021.
UK Distribution performance provided the principal driver for the acceleration in growth during Q3, with the business moving, as expected, back to growth against 2019 monthly comparators, as the strategic and operational changes made since July 2020 continue to drive the return towards its previous market position and performance.
SIG’s UK Exteriors and businesses in France and Poland, continue to perform very strongly. Ireland was a further driver for the Q3 acceleration, rebounding after the impact of local Covid‐related restrictions during the early part of the year.
Andy Murphy, Director at Edison Group, said: “SIG say that supply issues persist and that order books continue to build, but that material outlook is becoming ’clearer’. The outlook for the full year is also improving and with this in mind, the Company is pointing towards FY underlying operating profit to be ahead of market forecasts. As the stock recovers, the FY21 rating is perhaps less relevant as profitability is low in FY21e. Looking into FY22e and FY23e, SIG trades on a PER of 24x and 15x respectively ahead of today’s likely consensus upgrade. On an EV/EBITDA basis it trades on 4.8x and 5x for the relevant years.”