Every privately owned building products supplier I speak to is extremely positive about their current numbers, and whilst they have a uneasy knot in their stomach brought on by the potential impacts of Brexit in 2017, most are looking at positive order books and customer dialogue. So why is all the news from the major distributors negative? SIG's profit warning (see below) followed Wolseley's announcement of UK business restructure which followed Travis Perkins announcing branch closures.
Each bad news story has some unique specifics behind it. However, underlying them all is a sense of the need to call the market early just in case Project Fear does come to visit us in the next two years. All well and good in managing expectations and avoiding getting caught out in a downside scenario; however, in the public markets this leaves you vulnerable. Who knows we might finally see one of the many big North American building product distribution businesses arrive on our shores with a suitcase full of dollars unable to resist the double benefit of weak sterling and low share prices. IKO already own c6% of SIG ...
SIG plc [LON:SHI] ("SIG" or "the Group"), a leading distributor of specialist building products in Europe, with strong positions in its core markets of insulation and energy management, interiors and roofing, issued a trading update for the four months July to October 2016 ("the period").
On a like-for-like ("LFL") basis Group sales declined by 0.8% in the period. In the UK & Ireland LFL revenues decreased 1.1% in the period, with SIG Distribution and SIG Exteriors recording LFL sales declines of 1.2% and 1.7% respectively. 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 and, as already has been widely noted within the industry, the UK RMI market also remains challenging.