Distribution giant SIG has seen sales from continuing operations decrease 2.7% to £1,243.6m in the first half of 2015 having been adversely affected by a strengthening pound sterling. On a constant currency basis Group sales increased 3.1% in the first half and were ahead by 0.6% on a like-for-like (“LFL”) basis.
In UK & Ireland revenues from continuing operations during the first half year (H1) increased 5.8% to £679.2m (H1 2014: £642.1m), and were up 2.8% on a LFL basis, with the UK ahead by 2.1% and Ireland up 14.8%.
Sales in mainland Europe from continuing operations decreased 11.3% to £564.4m (H1 2014: £636.5m), mainly due to movements in foreign exchange rates. On a LFL basis sales in mainland Europe fell by 1.5%, but showed an improving trend, with a Q2 LFL increase of 0.9% compared to declines of 4.0% in Q1 2015 and 7.3% in Q4 2014.
The Group says it continues to make good progress on its Strategic Initiatives to improve business performance. These have delivered an incremental net benefit after costs of £7.0m in the first half, giving a total cumulative saving of £17.1m since the programme began, mainly sourced from procurement. SIG continues to have a high degree of confidence in achieving its target of a cumulative net benefit of at least £20m in 2015 and at least £30m in 2016.
On a statutory basis profit before tax increased 127.1% to £26.8m (H1 2014: £11.8m) mainly due to a reduction in amortisation of acquired intangibles, and the prior half year including costs associated with the sale of businesses. Basic earnings per share was unchanged at 3.1p (H1 2014: 3.1p).
Commenting on the results and outlook, Stuart Mitchell, SIG’s chief executive, said: “The Group delivered a robust first half performance against a strong comparative period, supported by continued good progress on its Strategic Initiatives. This was despite variable trading conditions in mainland Europe, increasing competitive pressures and a significant weakening of the Euro.
“Our outlook for the year is broadly unchanged although underlying market conditions are resulting in margin pressure, which will offset some of the benefit from our Strategic Initiatives. Assuming the improving sales trend in mainland Europe continues we expect to make year-on-year progress, with results in (the second half of the year) H2 weighted as anticipated.
“Looking further ahead the Group is encouraged by the clear opportunities to improve efficiency in the business, particularly in procurement and supply chain, and to drive growth as our markets recover.”