Distribution giant SIG Plc revealed that its profit fell 16.1 per cent in the first half of the year as growth in mainland Europe was dimmed by weakness in the UK. 

Shares in SIG fell more than 6 per cent during early trading but recovered by the end of the day, down 2.9 per cent.

SIG, which has been taking steps to strengthen its balance sheet including selling assets and reviewing costs, said it was conducting a ‘comprehensive review of its strategy.’

SIG plans to give updates to the review later this year and said that it is targeting ‘shorter term quick wins’ to benefit profitability in 2018.

SIG recruited Meinie Oldersma as chief executive in March to help turn around the businesses across Europe after former chief executive Stuart Mitchell left following a profit warning on weak demand, tougher competition and delays to a major IT project.

SIG reported underlying operating profit from UK and Ireland fell 21.7 per cent and margin fell  to 4.2 per cent for the six months ended June 30. In mainland Europe profit rose 2.1 percent.

SIG’s UK and Ireland like-for-like sales rose 1.3 per cent, lower than the 2.3 per cent rise it recorded a year earlier.

However, total like-for-like sales rose 2.8 per cent, compared with a 0.7 per cent rise in the year-ago period due to the recovery in construction markets in mainland Europe, particularly in France.

SIG anticipates stronger trading in the second half of the year.

The combination of lower gross margin and higher operating costs meant that the Group’s underlying operating profit declined 16.1 per cent to £45.7m (H1 2016: £54.5m) with underlying operating margin declining 100bps to 3.3 per cent (H1 2016: 4.3 per cent).

In the UK & Ireland, underlying operating profit fell 21.7 per cent to £27.5m (H1 2016: £35.1m) and underlying operating margin declined by 130bps to 4.2 per cent (H1 2016: 5.5 per cent). 

Last week Travis Perkins reported a 2.1 percent fall in first-half operating profit, hurt by a weak plumbing and heating market, but it’s contracts division which includes CCF saw profits rise.