Building supplies firm SIG cuts profit outlook amid lull in construction work

The London-listed company saw its share price tumble by more than a 10th on Monday morning following the gloomy update to investors.

Building supplies firm SIG has warned over weak demand for construction work in Europe (Gareth Fuller/PA) (PA Wire)

Building supplies firm SIG has warned over weak demand for construction work in Europe, leading it to downgrade its profit expectations for the year.

The London-listed company saw its share price tumble by more than a 10th on Monday morning following the downbeat update to investors.

Sales have been worse than expected in recent weeks, with a decline of about 7% in May and June compared with the same time a year ago, it said.

This performance, coupled with the expectation that conditions may not significantly improve over the second half of the year, means the firm now expects to report an underlying annual profit of between £20 million and £30 million.

Analysts had been pencilling in yearly earnings of as much as £43 million.

SIG is a Sheffield-based business which sells specialist building materials, like insulation, flooring, roofing, and tools, to international markets.

It said it had been impacted by a wider lull in demand for building and construction work, particularly in France and Germany.

It also pointed to a slowdown in its UK interiors business, but said this compares to stronger demand in Poland, Ireland, and for UK exteriors work.

To help offset slower sales, SIG said it had cut costs and modernised parts of the business.

The company previously revealed that it spent about £9 million last year in costs related to staff redundancies and closing down some of its warehouses.

SIG said it expects its financial performance in the second half of the year to be stronger as it reaps the benefits of its cost-saving and productivity initiatives.

But it also cautioned over the potentially slow improvement of conditions and demand in markets in Europe.