SIG Plc (SHI.L), a supplier of insulation, interiors, exteriors and specialist construction products, reported Friday about 9 percent rise in total revenues for the first half and said it expects underlying profit before tax to nearly double from last year. However, the company expects growth to moderate in the second half due to macroeconomic factors and stronger comparators.
In its trading update for the six months ended June 30, the company said its total revenues increased to about 1.40 billion pounds (about $2.24 billion) from prior year's 1.28 billion pounds. Sales from continuing operations, i.e. excluding divested scaffolding and safety & workwear businesses, rose about 10 percent.
Strong outperformance in Mainland Europe and moderate product price inflation aided the growth, the company said.
SIG generated nearly 3 percent increase in UK & Ireland revenues and over 15 percent growth in Mainland Europe, partly helped by weak weather-affected 2010 comparators.
The results mainly reflected good growth in residential construction activity levels.
In both operating regions, gross margins are expected to be broadly consistent with last year.
For the first half, underlying profit before tax, which excludes certain items, is projected to be about 34 million pounds, in comparison to last year's 18.5 million pounds.
"The performance reflects the operational gearing benefit of strong sales growth at stable gross margins, delivered through a leaner cost base as a result of management initiatives in recent years," the company said in a statement.
The company is scheduled to release its interim results on August 25.
Looking ahead, SIG said it is not directly exposed to those Southern European countries facing the most difficult economic challenges and also uncertainty in the Eurozone would not have any immediate impact on recovery in its main countries of operation.
In the UK, consumer discretionary spending is projected to be impacted by a weaker economic backdrop.
SHI.L is currently trading at 145.70 pence, up 0.50 pence or 0.34 percent.
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