Insulation products group SIG (SHI) has issued a major profit warning that's cost chief executive Stuart Mitchell his job.
Its shares slump 23.5% to 88.6p.
The company says tough trading conditions and strong competition in the UK will mean 2016 pre-tax profit will be in the range of £75m to £80m. That is considerably below the £92m consensus forecast prior to the trading update.
The disappointing news adds to negative sentiment surrounding the UK building and construction sector.
Builders' merchant Travis Perkins (TPK) last month said it would shut 30 branches after it too issued a profit warning amid slowing sales.
Its rival Grafton (GTFU) issued its own profit warning in August, also flagging tough UK competition.
WHAT'S GONE WRONG?
SIG says like-for-like sales fell 0.8% in the four months between July and October. UK and Ireland was worst hit with 1.1% like-for-like sales decline.
SIG says it has experienced project delays in the commercial sector and subdued demand for technical insulation in the petrochemical and manufacturing sectors.
The company also says its offsite construction division performance has been affected by the commissioning of new plant and machinery taking longer than expected. Some projects have also been pushed into 2017.
SIG insists its order book is 'growing and remains strong'.
European trading is mixed. Problems in France seem to be getting sorted out, yet Germany is getting worse.
SIG has undertaken a new review of its UK branch network and cost structure which will result in £10m annualised net savings and a £10m one-off charge.
That adds to previous cost reduction plans, taking total savings to at least £20m in 2017.
WHO WILL RUN SIG NOW?
SIG's non-executive director Mel Ewell will become interim chief executive while the board conducts an external search for a new boss.
Ewell is considered a turnaround expert with previous experience at international courier delivery group TNT and infrastructure services provider Amey.
