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SIG sticks to outlook despite strong end to 2020

SIG left its outlook unchanged despite reporting a strong end to its financial year that helped push its annual loss lower than expected.
The building materials group swung to a £53.3m underlying operating loss in the year to the end of December from a £42.5m profit a year earlier as revenue fell 12.6% to £1.87bn. SIG told investors in January to expect a loss of £57m to £61m.

SIG’s statutory pretax loss was £132.9m compared with a £124.5m loss a year earlier. The company paid no dividend. SIG shares fell 5.7% to 37.66p at 09:24 GMT.

The group said it had a strong end to 2020 that beat expectations with like-for-like sales up 4% compared with a 13% reduction for the year. Net debt dropped to £4.1m helped by the sale of SIG’s air handling division in January 2020 and £152m capital raised in July.

SIG said trading so far in 2021 was in line with its expectations and on a similar trajectory to the fourth quarter. The company said it expected to return to profitability and cash generation in the second half, in line with previous guidance.

Steve Francis, chief executive, said: “I am delighted that due to our return to growth strategy we delivered a solid second half and have begun to return the business to growth after a long period of decline.”

SIG was already struggling before the pandemic hit its business. The company cut debt, devolved decisions to its branches and revamped its management, including appointing Francis as CEO in April.

Liberum analyst Charlie Campbell said: “SIG is a recovery story after new management joined and the group was recapitalised. The outlook is unchanged, with management expecting to achieve revenue growth in 2021.

“The year has started well, which is encouraging as weather was unhelpful in the UK … but we expect it to remain loss-making this year, so investors will need to be patient.”

Francis said: “Continued uncertainty remains regarding Covid-19, as well as rising input prices and early signs of some potential materials shortages. However, providing there is no further material disruption to either our business or end markets as a result of the pandemic, the board expects the near-term benefits of the actions taken in 2020 to deliver organic revenue growth in 2021, including market share gains.”

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