SIG, the distribution giant, has issued a profits warning and also announced that group chief executive Stuart Mitchell has left the business by mutual consent.
In a statement to the stock exchange SIG said that weaker than anticipated trading conditions and intensified competition in the UK the Group now expects that underlying profit before tax for the year ending 31 December 2016 will be in the range of £75m to £80m, lower than the £90m City analysts had been forecasting.
In response the Group has accelerated its supply chain and procurement efficiency programmes and is confident of achieving savings in excess of £13m this year. In addition SIG has undertaken a further review of its UK branch network and cost structure which will provide it with annualised net savings of approximately £10m, with an exceptional charge of c.£10m. These efficiencies are in addition to previously disclosed targets and mean that the Group is now targeting savings of at least £20m in 2017.
Group revenues in the period increased 10.6% compared to the same period last year, having benefited from movements in foreign exchange rates (+8.9%) and acquisitions (+3.9%), offset by fewer working days (-1.4%). On a like-for-like (“LFL”) basis Group sales declined by 0.8% in the period.
Following a slowing of activity around the time of the EU referendum, trading conditions in the UK have continued to soften and competition in the market has intensified. In particular the Group has been impacted by delays to some projects in the commercial sector and subdued demand for technical insulation in the petrochemical and manufacturing sectors.
The Board of SIG plc also announced that Stuart Mitchell had stepped down as group chief executive by mutual agreement with immediate effect. Mel Ewell, a Non-Executive Director, has been appointed Interim group chief executive on a full time basis whilst the Board conducts an external search for a new Group Chief Executive.
Leslie Van de Walle, Chairman of SIG plc, said:”On behalf of the Board and Group, I would like to thank Stuart for his commitment and all that he has contributed during his four year tenure as Group Chief Executive. Stuart brought together a loose federation of independent businesses; developed a new strategy and plans to improve our procurement and supply chain functions; and identified new areas of organic growth opportunities in Air Handling and Offsite.
As Interim Group Chief Executive, Mel brings his experience in logistics, construction and engineering, and comes with a strong track record of operational delivery and successful change management at TNT and Amey. During his five years as a Non-Executive Director he has developed a detailed knowledge of the Group, which has made him a strong individual to drive forward our plans during this transitional period.”