(Alliance News) - Building products supplier SIG on Friday announced plans to bring in a substantial new investor as part of an equity fundraise to deliver a new growth strategy, after swinging to a loss in 2019.
SIG reported a 9.0% decline in revenue in 2019 to GBP2.08 billion. On a like-for-like basis, sales declined by 7.6%.
SIG said its performance was hurt by market share losses in UK and Germany due to poor execution of transformation initiatives which, it believes, disconnected the business from its customers, suppliers and its front-line colleagues.
As a result, the company swung to pretax loss of GBP112.7 million in 2019 compared to GBP10.3 million profit a year prior.
SIG cut its dividend to 1.25 pence, having paid a 3.75p per share payout in 2018.
"The 2019 results, albeit in line with January guidance, are disappointing. However, the board has taken decisive action to address this performance. A new chief executive has been appointed and, this morning, we announced the appointment of a new chief financial officer," said Chair Andrew Allner.
SIG named Ian Ashton as permanent CFO and Simon King as a non-executive director, both with effect from the start of July.
Ashton replaces Kath Kearney-Croft, who had taken on the role of interim CFO back in February.
Ashton will join SIG from Low & Bonar, where he has served as CFO. Prior to that, he was finance head of Labviva, a US-based technology company.
Going forward, SIG said it has explored its wider funding options and is intending to raise GBP150 million in new equity in the coming weeks to strengthen its capital structure and enable the management team to deliver its new growth strategy.
The equity raise will be led by the US private equity firm Clayton, Dubilier & Rice, which will contribute up to GBP85 million and take an about 25% stake in SIG as a result.
SIG shares were up 8.2% early Friday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.8% at 6,171.28
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Hang Seng: down 0.7% at 22,963.19
Nikkei 225: closed down 0.2% at 21,877.89
DJIA: closed down 147.63 points, 0.6%, at 25,400.64
S&P 500: closed down 0.2% at 3,029.73
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GBP: firm at USD1.2333 (USD1.2323)
EUR: up at USD1.1093 (USD1.1067)
Gold: down at USD1,719.36 per ounce (USD1,722.65)
Oil (Brent): firm at USD34.88 a barrel (USD34.45)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
0930 BST UK capital issuance
1100 BST Ireland retail sales index
0930 CEST EU EuroCOIN indicator of euro area economic activity
1000 CEST EU monetary developments in euro area (M3)
1100 CEST EU flash estimate euro area inflation
0830 EDT US advance international trade in goods
0830 EDT US personal income & outlays
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Friends and family will be able to meet in parks and gardens in socially distanced groups of six under UK Prime Minister Boris Johnson's gradual easing of the lockdown for England, PA reports. Johnson said that all five of his tests to move into the next phase had been met, allowing schools to begin reopening and greater contact to be permitted from Monday. Johnson on Thursday said people would be able to see "both parents at once, or both grandparents at once" in what he said would be a "long-awaited and joyful moment" for many. But the PM continued to be dogged by questions over his top aide Dominic Cummings after Durham police said he may have committed "a minor breach" of lockdown rules.
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Car production in the UK fell to its lowest level since the Second World War in April amid plant closures because of the coronavirus crisis. The Society of Motor Manufacturers & Traders said production was down by 99.7% compared with April last year, with just 197 models leaving factory gates in the month. Instead of making cars for the UK and global export markets, many manufacturers produced personal protective equipment in April, including face shields, visors and medical gowns. The "exceptional" figures follows a weak April 2019, when volumes fell due to temporary shutdowns as manufacturers sought to mitigate the impact of an expected end-March Brexit. Latest independent analysis suggests annual UK car production could fall below one million this year, which would be lower than in 2009.
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French first quarter gross domestic product was revised up slightly but still showed a sharp drop, the National Institute of Statistics & Economic Studies said, while inflation continues to slow. In the first quarter of the year, GDP fell 5.3% quarter-on-quarter after a 0.1% decline in the fourth quarter of 2019. While a severe fall, the first quarter reading has been revised up from the initial report of a 5.8% drop. Imports slumped 5.7% in the quarter and exports were down 6.1%, while household consumption expenditure was down an "unprecedented" 5.6%.
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BROKER RATING CHANGES
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BARCLAYS CUTS ADMIRAL GROUP TO 'EQUAL WEIGHT' ('OVERWEIGHT') TARGET 2304 (2376) PENCE
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BARCLAYS RAISES DIRECT LINE TO 'OVERWEIGHT' ('EQUAL WEIGHT') - TARGET 347(341) PENCE
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JEFFERIES RAISES PROVIDENT FINANCIAL TO 'BUY' ('HOLD') - TARGET 250 (470) PENCE
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JEFFERIES RAISES AO WORLD TO 'BUY' ('HOLD') - TARGET 165 (110) PENCE
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COMPANIES - FTSE 100
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AstraZeneca said its phase 3 Adaura trial of Tagrisso in early-stage cell lung cancer found that the drug reduced the risk of disease recurrence or death by around 80%. The detailed results were from a trial of Tagrisso, the brand name for osimertinib, after surgery in patients with "epidermal growth factor receptor-mutated (EGFRm) non-small cell lung cancer after complete tumour resection with curative intent". EGFR mutations are associated with some lung cancers. In the primary endpoint of disease-free survival in patients with stage 2 and 3A disease, treatment with Tagrisso reduced risk of disease recurrence or death by 83%. Disease-free survival in the overall trial population, covering stages 1B to 3A, found a 79% drop in the risk of disease recurrence or death.
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Mexican gold miner Fresnillo said it has focused on responding to the Covid-19 over the past three months, implementing a range of safety measures across the business. "Up to this point, we have had no officially confirmed Covid-19 cases originating from inside our operations," said Chair Alberto Bailleres. However, he noted that three colleagues were officially diagnosed from exposure outside. Fresnillo also confirmed that the board and senior management took voluntary and temporary pay cuts to help the company get through this "unprecedented" situation. Fresnillo said its operations are critical to the economies in which it operate, with mining now confirmed as an essential activity in Mexico. "Operationally, 2019 was a more challenging year, as expected," said Bailleres. Both silver and gold production fell from 2018 levels, due to lower-than-anticipated grades in its key mines. In the face of these operational challenges, Fresnillo said it has increased the pace and scale of investments in a series of projects and taken corrective actions to bring production back to acceptable levels in the short-term, and to achieve steady growth in future years.
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COMPANIES - FTSE 250
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London-focused property investor Capital & Counties Properties confirmed it is in talks to take a stake in real estate investment trust Shaftesbury. Capital & Counties said it is in discussions with the unnamed "selling shareholder" to pick up a 26% interest in fellow FTSE 250 constituent Shaftesbury, whose portfolio includes restaurants and pubs in London's West End district. Shaftesbury has a market capitalisation of GBP1.85 billion. That puts the value of a 26% interest at GBP481 million. Capital & Counties has a GBP1.36 billion market cap.
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B&M European Value Retail reported a strong end to the fourth quarter - which ended on March 28 - driven by exceptionally strong March performance in Grocery, with the B&M UK fascia like-for-like revenue up 6.6%. Going forward, B&M said it experienced strong revenue growth in the first 8 weeks to May 23, with B&M UK fascia like-for-like revenue up 23%, driven by exceptionally strong Do It Yourself and Gardening categories, and despite a significant fall in customer count. If DIY and Gardening categories are excluded, the B&M UK fascia like-for-like revenue over that 8 week period was up 10%. "We have encountered exceptionally strong demand in our UK business over recent weeks. Customers have been coming to our stores much less frequently through the lockdown but their average spend has been much higher than normal," said Chief Executive Simon Arora.
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Oil & gas producer Energean said its shareholder gave a green light for the name change from Energean Oil & Gas PLC to Energean PLC. In terms of trading, the company noted that it retains its strong commitment to sustainable development regardless of the impact of the global Covid-19 pandemic.
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COMPANIES - GLOBAL
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Renault said it will cut nearly 15,000 jobs, including 4,600 at its core French operations, as it tries to regain its footing in the wake of plummeting car sales and the shift to electric vehicles, AFP reports. "In a context of uncertainty and complexity, this project is vital to guarantee a solid and sustainable performance," interim CEO Clotilde Delbos said in a statement. The cost-cutting plan, which was unveiled to labour representatives Thursday, aims to reduce overheads by EUR2 billion over the next three years. Four production sites in France could be closed or restructured, the automaker said, and its hulking factory at Flins northwest of Paris will stop making the Zoe electric hatchback from 2024. An additional 10,000 jobs will be cut outside France, with expansion plans now halted in Morocco and Romania, and under review in Russia.
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IT, networking and cyber security firm Cisco Systems said it plans to buy internet intelligence provider ThousandEyes, whose technology warns when a user's experience "is less than ideal and can pinpoint where those failures were caused", said San Jose, California-headquartered Cisco. No financial details of the purchase of ThousandEyes, headquartered in San Francisco and founded in 2010, were provided.
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Friday's Shareholder Meetings
Eve Sleep
Fresnillo
K3 Business Technology
Yew Grove REIT
Phoenix Spree Deutschland
Holders Technology
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By Tom Waite; thomaslwaite@alliancenews.com
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