SIG shares plummet as UK construction downturn hits profits
The Sheffield-based business said annual profits in its core business will be ‘significantly lower’ than predicted.
Shares in building supplies firm SIG have plummeted after the business warned that a deepening downturn in the UK and German construction markets would hit profits.
The Sheffield-based business shed more than a fifth of its share value in early trading after it told investors that annual profits in its core business will be “significantly lower” than previously predicted.
The company has also separately announced that it has secured agreements to sell its air handling and building solutions divisions in two separate deals for more than £230 million in total.
SIG, which supplies specialist building materials to trade customers across Europe, said it has been impacted by a “deterioration in the level of construction activity in key markets” due to the turbulent economic backdrop, particularly in the UK and Germany.
It said trading conditions have particularly worsened over “recent weeks” as economic uncertainty has continued to ratchet higher.
Management at the company is “taking ongoing actions” to address market weakness, it said.
It added that new initiatives and seasonal trading patterns mean it still expects to deliver a stronger second half of 2019.
However, SIG said that it is now expecting annual profits in its specialist distribution and roofing businesses to be “significantly lower” than previously forecast.
On Monday, the FTSE 250 firm also announced that it has agreed a deal to sell its air handling division to France Air Management for 222.7 million euro (£198.3 million).
The division, which employs 1,250 people across Europe, produces specialist air heating, ventilation and air conditioning products.
At least £130 million of the cash proceeds will be used to address the indebtedness of the business.
SIG also announced it has agreed a £37.5 million deal to sell its building solutions business to Kingspan Group.
Shares in the company fell 21% to 93p in early trading on Monday.