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Building supplier SIG lays groundwork for recovery

SIG supplies materials to the construction industry - ANDY RAIN
SIG supplies materials to the construction industry - ANDY RAIN

SIG, which supplies insulation, roofing and interiors materials to the construction industry, has shown signs that it is beginning to recover from a wobble, as revenues in the UK tick up.

In a trading update ahead of its half-year results, the company said UK and Ireland sales had risen 0.7pc in the six months to June 30, an improvement on the 0.1pc fall seen in the previous half-year period.

Overall, revenues across the company as a whole were 2.4pc higher.

Shares in the company were as much as 6.51pc higher on Wednesday morning, hitting 155.4p.

The news will cheer investors and comes after chief executive Mel Ewell promised in January to restore the firm’s focus on customers after it suffered a “disappointing year”.

Sales for 2016 would have been broadly flat at 0.3pc compared to the previous year, were it not for favourable foreign exchange movements and acquisitions, which boosted revenue.

Mr Ewell took up the role after the departure of previous boss Stuart Mitchell in November, when the company issued a profit warning.

But SIG said on Wednesday that it had improved its performance in the UK because it had managed to pass on increased supplier costs to customers, and in mainland Europe it had benefited from a recovery in the construction market, particularly in France.

SIG said it expected to report a stronger second half of the year, although it noted that the “increased political and macro uncertainty in the UK” posed a risk to the business.

It also said that it was improving its net debt, which it expects to be lower than the £259.9m it reported in December.

Adrian Kearsey, analyst at Panmure Gordon, said the trading update was “reassuring”.

“Whilst it is too early to herald a full turnaround of the business, we are increasingly seeing a route to recovery. This is being driven by a 'back to basics' approach,” he said.

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