Construction products supplier SIG plc (SHI.L) Thursday reported a loss for 2009, as exceptionally challenging trading conditions led to a decline in revenue and the company incurred more charges than last year. Looking ahead, SIG said its pre-tax profit for the first six months of 2010 will decline from last year due mainly to bad weather conditions in the early part of the year.
Issuing the preliminary results, SIG reported a loss attributable to equity holders of the company of GBP 45.6 million or 9.7 pence per share for the year ended December 31, 2009, compared to a profit of GBP 6.3 million or 3.8 pence per share in 2008. Excluding other items, profit attributable to equity holders plunged to GBP 42.1 million or 9 pence per share from 96.6 million or 58.7 pence per share.
The company reported a pre-tax loss of GBP 55.3 million, compared to a pre-tax profit of GBP 33.1 million last year. Underlying pre-tax profit declined to GBP 60.6 million from the previous year's GBP 137.3 million, as underlying operating profit margin fell to 2.9% from 5.6%.
Other items include amortisation of acquired intangibles, impairment charges, restructuring costs and gains and losses on derivative financial instruments. In 2009, other items totaled GBP 115.9 million, compared to GBP 104.2 million last year.
Full-year revenue declined to GBP 2.744 billion from GBP 3.054 billion in the prior year. Like for like sales were down 11.6% in Sterling, and down 15.6% in constant currency.
The company reported an operating loss of GBP 32.5 million in 2009, compared to an operating profit of GBP 107 million last year. Excluding other items, operating profit declined to GBP 80.9 million from GBP 169.8 million in 2008.
Total sales in Mainland Europe rose 2.4% to GBP 1.417 billion and like for like sales on a constant currency basis decreased 7.6%. Underlying operating profit decreased 26.1% to GBP 50.2 million.
Total sales in the UK and Ireland dropped 20.6% to GBP 1.326 billion and like for like sales declined 21.7%. Underlying operating profit decreased 66.1% to GBP 37.7 million.
By product group, Insulation and Building Environments' revenue dropped to GBP 1.086 billion from GBP 1.112 billion, and Interiors revenue in 2009 declined to GBP 685.9 million from GBP 809.2 million. Exteriors reported 2009 revenues of GBP 749 million compared to GBP 848.9 million last year. Revenue from Specialist Construction Products declined to GBP 222.2 million from GBP 284 million.
Impairment charges rose to GBP 30 million in 2009 from GBP 14.2 million in 2008 and restructuring costs climbed to GBP 54.8 million from GBP 22.2 million.
Net debt was reduced to GBP 254.5 million from GBP 697.1 million at the end of 2008.
Commenting on the results, Les Tench, the company's Chairman, noted, "2009 was an exceptionally challenging year for SIG, with the global economic downturn significantly reducing construction activity and hence demand for the products and services supplied by the Group.''
Further, the company said its Board is not proposing a final dividend for 2009. The company had declared no interim dividend. SIG said its board remains committed to a progressive dividend policy and would resume dividend payments when markets stabilise.
Additionally, the company noted that the extreme cold weather conditions and snow in the UK and Mainland Europe impacted its business, as construction site activity was interrupted and it was difficult to make deliveries. The company is estimated to have lost around GBP 30 million of sales in the first two months of 2010 due to bad weather.
As far as 2010 is concerned, SIG believes that as macroeconomic conditions remain uncertain, the prospects for recovery in construction markets are unclear with regard to timing and degree. The company's outlook for 2010 remains challenging in all its markets although it is expected to gradually improve as the conditions improve.
Les Tench added, ''The extreme cold weather conditions and snow experienced across the UK and Mainland Europe in January and February have resulted in a particularly slow start to trading in 2010. It is management's expectation that the shape of the year is now more likely to be significantly more weighted towards the second half and that the pre tax profit for the first six months will be well below the result for the equivalent period last year.''
SHI.L is currently trading at 127.40 pence, down 1.60 pence or 1.24%.
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