A trading update from distribution giant SIG plc has revealed what the new chief executive said is a disappointing 2016 performance. The update outlined that like for like Group sales rose by 0.3% and that margins are under pressure.
Mel Ewell, who replaced Stuart Mitchell as chief executive in November, said: “2016 was a disappointing year for SIG. While the competitive environment, particularly in the UK, was challenging, our transformational change programme, although taking the Group in the right strategic direction, distracted us somewhat from our customers.
“Going forward we need to better balance business change with the day-to-day operations of the Group. Our principal aims for 2017 are therefore to restore our customer focus, place an increased emphasis on sales growth, and reduce leverage.”
The trading update revealed that SIG sales in 2016 were c.£2,738m, an increase of 11.2% compared to prior year, having benefited from foreign exchange movements (+6.9%), acquisitions (+3.7%), and working days (0.3%). On a like-for-like (LFL) basis Group sales increased 0.3%.
The Group continues to expect that underlying profit before tax for 2016 will be within its previously stated £75m to £80m range, and that gross margin will be around 30bps lower than the prior year.
In the UK & Ireland LFL sales in the year increased 1.1%, with SIG Distribution up 1.2% and SIG Exteriors down 1.5%. In Mainland Europe LFL sales declined 0.5%, with France and Germany down 2.0% and 1.3% respectively.
SIG also said it plans to suspend its infill acquisition programme.