SIG Plc’s Share Price Crashed 25% on a Reduced FY Profit Range

The SIG plc (LON: SHI) share price crashed 25.05% after issuing a trading update for the three months ended 30 September 2023, its fiscal third quarter. The company’s like-for-like (LFL) sales fell 2% during the quarter compared to a similar period last year.

The company revealed it was facing challenging market conditions as demand softened significantly during September. The company expects the soft demand scenario to persist for the rest of the year, triggering the share price crash. 

SIG Plc lowered its full-year underlying operating profit guidance to between £50 million and £55 million. The company noted that its performance in the second half of its current fiscal year had reaped benefits from the ongoing productivity initiatives, including the early impact of already executed restructuring actions. 

According to SIG Plc, the newly built residential segment was the most affected by the softening demand for insulation, roofing, commercial interiors and specialist construction products. The newly built segment in all the markets served by SIG Plc was negatively affected. 

The company noted that it was still outperforming its peers in the same industry in most markets due to the strengthened performance of its branch network over the past two to three years. The firm is tightly managing its capital expenditures and working capital. 

SIG Plc anticipates that demand conditions will remain subdued throughout the remainder of the year, with minimal overall impact from fluctuations in input prices. Our ongoing efforts to enhance productivity bolstered the company’s profitability for the year's second half.

This includes the early results of restructuring actions we've already taken, expected to yield annualised benefits of £4 million. These actions involve streamlining central costs and reevaluating cost structures in specific operational segments, notably in the UK. 

Additionally, as previously reported, we anticipate a profit of approximately £3 million from a property transaction in France. Despite the positive early outcomes of these initiatives, the lower-than-expected sales have led the Board to revise its outlook for the Group's full-year underlying operating profit. 

The company remains committed to advancing its strategic and operational initiatives, which are vital to achieving the Group's long-term objectives. 

SIG Plc share price. 

The SIG Plc share price crashed 25.05% to trade at 25.52p, from Wednesday’s closing price of 34.05p.