Sales have been lower than anticipated in recent weeks, with a decline of approximately 7% in May and June compared to the same period last year
Building supplies company SIG has issued a warning about weak demand for construction work in Europe, leading to a downgrade in its profit expectations for the year.
The London-listed firm saw its share price plummet by over 10% on Monday morning following the disappointing update to investors. Sales have been lower than anticipated in recent weeks, with a decline of approximately 7% in May and June compared to the same period last year.
This performance, along with the expectation that conditions may not significantly improve in the second half of the year, means the company now expects to report an underlying annual profit of between £20million and £30million. Analysts had previously predicted yearly earnings of up to £43million.
Sheffield-based SIG, which sells specialist building materials such as insulation, flooring, roofing, and tools to international markets, said it had been affected by a wider decrease in demand for building and construction work, particularly in France and Germany. It also highlighted a slowdown in its UK interiors business, but noted stronger demand in Poland, Ireland, and for UK exteriors work. To counteract slower sales, SIG said it had reduced costs and modernised parts of the business.
The company had previously revealed that it spent around £9million last year on costs related to staff redundancies and closing some of its warehouses. SIG, the building materials supplier, has forecasted a stronger financial performance in the second half of the year due to its cost-saving and productivity initiatives.
However, it also issued a warning about the potentially slow improvement of conditions and demand in European markets.
