Specialist building products firm SIG (SHI) pares early gains to trade 2% lower at 146.7p this morning.
The company had initially traded higher as 2017 underlying operating profit came in slightly ahead of expectations but the optimism faded as the market took a closer look at the results.
This profit of £94m was flattered by the sale of its Building Systems arm and of several real estate assets. Underlying pre-tax profit actually fell 10% on a year-on-year basis and the company posted a statutory loss of £51.2m as it took several impairments relating to a restructuring effort.
The company had ended 2016 on the floor after a major profit warning, with chief executive Stuart Mitchell falling on his sword.
WHAT NEXT AFTER PERIOD OF CONSOLIDATION?
Successor Meinie Oldersma has made efforts to repair the balance sheet and was able to offer shareholders a slight increase in the full year dividend to 3.75p.
A period of rebuilding has ultimately seen the shares rise 64% from their December 2016 lows but AJ Bell investment director Russ Mould reckons more might be required for the share price to advance further.
‘After a year of consolidation, which was rewarded by a handsome increase in the share price, Oldersma may have to serve up something more impressive to keep the market on side in 2018,’ he says.
Reiterating its ‘neutral’ rating, Irish stockbroker Davy comments: ‘On first glance, the underlying performance appears slightly weaker than we had expected. However, the medium-term story is unchanged - if management can create a more efficient cost base and stronger balance sheet, its medium- term prospects look better.’
