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SIG first-half profit drops on UK weakness; shares slide

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SIG first-half profit drops on UK weakness; shares slide

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(Reuters) – Construction materials supplier SIG Plc <SHI.L> said its profit fell 16.1 percent in the first half of the year as growth in mainland Europe was dimmed by weakness in the UK. Shares in SIG fell more than 6 percent in London on Tuesday morning. SIG, which has been pursuing a number of actions to strengthen its balance sheet including selling assets and reviewing costs, said it was conducting a “comprehensive review of its strategy.” The company plans to give updates to the review in the fourth quarter and said that it is targeting “shorter term quick wins” to benefit profitability in 2018. “Still early days, but SIG’s new management team appears to have steadied the ship,” Davy Research analysts wrote in a note. The company in March hired Meinie Oldersma as CEO to help turn around the businesses across Europe after its former boss left following a profit warning on weak demand, tougher competition and delays to some projects. SIG, which supplies insulation and roofing products, said underlying operating profit from UK and Ireland fell 21.7 percent and margin fell 130 basis points to 4.2 percent for the six months ended June 30. In mainland Europe profit rose 2.1 percent. SIG’s UK and Ireland like-for-like sales rose 1.3 percent, lower than the 2.3 percent rise it recorded a year earlier. However, total like-for-like sales rose 2.8 percent, compared with a 0.7 percent rise in the year-ago period due to the recovery in construction markets in mainland Europe, particularly in France. SIG maintained its full-year expectations as it anticipated stronger trading in the second half of the year. SIG’s underlying operating profit to 45.7 million pounds ($59.6 million) in the six months ended June 30 from 54.5 million pounds. Operating costs, on a continuing basis, also rose 11.1 percent to 322.5 million pounds. Revenue rose 8.6 percent to 1.38 billion pounds from a year earlier. The country’s biggest supplier of building materials Travis Perkins <TPK.L> reported a 2.1 percent fall in first-half operating profit last week, hurt by a weak plumbing and heating market and recent investments.

(Reporting By Justin George Varghese in Bengaluru; Editing by Gopakumar Warrier)
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