Shares in SIG (LSE:SHI) fell by as much as 22% on Thursday after the building materials distributor warned that challenging market conditions had weighed on first-half trading and lowered expectations for full-year profitability.
Weak construction demand pressures sales
SIG reported a 1.5% decline in like-for-like sales during the first half of the year, reflecting continued weakness across construction markets. The company said adverse weather conditions at the beginning of the year also disrupted trading and contributed to the softer performance.
Management added that it does not expect a meaningful improvement in market conditions during the second half of the year.
Profit outlook reduced
As a result of the weaker trading environment, SIG now expects to deliver annual underlying operating profit of approximately £25 million (US$33.8 million).
The revised guidance reflects ongoing pressure across the construction sector, with subdued demand continuing to affect activity in the company’s end markets.
New improvement programme targets stronger cash generation
Alongside the trading update, SIG unveiled a new improvement programme aimed at strengthening its financial performance over the medium term.
The initiative is designed to generate £100 million in cash while increasing the group’s annual profit run rate by £50 million by the first half of 2028. Management expects the programme to improve operational efficiency and enhance profitability as market conditions recover.
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