SIG PLC on Tuesday said prolonged challenging trading conditions led to lower sales in the first half of the year.

In the six months ended June 30, the Sheffield-based supplier of insulation, roofing, commercial interiors and specialist construction products said revenue fell 7.0% to £1.32 billion from £1.42 billion a year earlier. It swung to a pretax loss of £11.3 million from a profit of £12.2 million.

Like-for-like sales declined 6.8% compared with a 0.2% fall a year ago. Underlying operating margin fell to 0.9% from 2.3%.

SIG said prolonged challenging trading conditions in its larger businesses had led to lower volumes. Pricing was also down, partly due to modest net input cost deflation.

The firm noted challenging conditions in UK Interiors, France and Germany, while Poland and Ireland delivered growth against a stronger local backdrop.

‘All businesses continue to perform well relative to their markets, most notably in Germany and UK Roofing,’ the company added.

Operating margin was impacted by the operational gearing effect of reduced volumes and pricing year-on-year, SIG stated.

The full-year outlook remains in line with the update in June. SIG expects underlying operating profit in the range of £20 to £30 million.

But the firm sees increasing benefits from productivity and cost initiatives as underpinning a slightly stronger second half. The extent of this improvement is subject to the evolution of demand conditions, particularly given market uncertainties in France and Germany.

SIG explained operating profit is sensitive to relatively small movements in sales.

Chief Executive Gavin Slark said: ‘Our results in the first half reflect the prolonged challenging market conditions we are currently facing across most of our European businesses. In light of these conditions, we took further actions to reduce our permanent cost base in the half, which will benefit us in the future.’

SIG said further permanent cost restructuring actions taken in the first half are driving reductions in central and operating company overheads, now totalling £15 million in annualised savings since last year’s second half.

No interim dividend will be paid for 2024, SIG said, although it remains committed to reinstating a payout, once it is ‘appropriate to do so’.

Shares in SIG fell 3.3% to 21.67 pence on Tuesday in London.

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