(Alliance News) - Shares in SIG PLC plunged on Thursday as it guided for a substantial drop in profit for 2019, amid challenging market conditions and declining revenue.
Shares in the Sheffield-based building materials supplier were 25% lower at 89.74 pence on Thursday in London.
SIG said it had made considerable progress during the year in transforming its business, including the disposal of its Air Handling and Building Solutions businesses.
However, this progress was made against a backdrop of a tough market environment, as the group reported an ongoing deterioration in the level of construction activity in key markets, and indications of further weakening, mainly in the UK.
There is also challenges in sustaining sales rates, and profit protection measures implemented by SIG set to mainly take effect in 2020, not 2019 as previously expected.
As a result, underlying pretax profit for 2019 is expected to be GBP42 million, a 44% decrease from GBP75.3 million the year before.
For 2019, like-for-like revenue declined by 6.1%, as like-for-like revenue from UK & Ireland dropped by 16%, more than offsetting like-for-like revenue growth of 1.2% from Mainland Europe.
"The key challenge for the group in 2020 is to deliver a return to top line growth. Management is taking a number of actions to address sales performance which, coupled with profit protection actions taken in recent months and the annualised benefit of the broader transformation, will leave the group well placed to capitalise on any recovery in trading conditions," SIG said in a statement.
SIG will publish its annual results on March 6.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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SIG (SHI)