Specialist building materials distributor SIG (SHI) pleased the market with its third quarter trading update that included a upping of anticipated full year profits.

Continued sales momentum during the quarter to 30 September and improving operating performance makes the company ‘more confident in the near term outlook’ and therefore raised its guidance for underlying operating profits to ‘ahead of current market forecasts’.

The current consensus is for operating profits of £32 million, after a loss of more than £50 million last year due to the pandemic, on sales of roughly £2.2 billion, according to S&P Market Intelligence.

That saw investors pile into the stock, sending the shares up as much as 7.5% early on before easing back some. At around 11am, the stock was 3.5% up at 48p.

RAMPANT DEMAND

SIG firm said the ‘solid’ trading performance it had seen in July and August continued into September, generating 17% growth in like-for-like sales on last year and 9% growth on the same period in 2019.

The main driver was better trading at the UK insulation and interiors distribution business, which continued to experience high demand thanks to the strength of the new build and repair, maintenance and improvement markets.

The UK and French exteriors businesses, which supply industrial roofing, tiles and cladding systems, also performed ‘very strongly’ along with the firm’s Polish operation.

While it acknowledged supply chain issues across several product areas, the order book hadn’t been affected while feared material shortages of supplies was actually becoming clearer. SIG has also been able to pass on cost inflation to customers, helping top line sales in the third quarter.

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Issue Date: 22 Oct 2021