Building materials group SIG (SHI) posted a loss for 2021, in contrast to analysts’ forecasts of a small profit.

Despite the seemingly disappointing result, the shares gained 9% to 40.5p as investors looked to the current year which the company said had started well.

REPORTED LOSS

The specialist supplier of insulation, roofing and exterior products to the construction sector reported a 2021 pre-tax loss of £15.9 million.

According to S&P Market Intelligence, the consensus estimate was for a profit of £11.5 million.

However, the loss was due to charges of £35.2 million meaning underlying pre-tax earnings were comfortably ahead of forecasts at £19.3 million.

The charge was largely made up of goodwill impairments, amortisation of intangibles, restructuring costs and cloud computing expenses.

At an operating level, earnings were exactly in line with market forecasts at £41.4 million on revenues of £2.29 billion, which slightly exceeded estimates.

BRIGHT OUTLOOK

Trading picked up in the second half of 2021 driving a strong recovery in UK sales and record results in France and Poland.

The firm said the current year had started ‘ahead of plan, helped by a continuation of the robust demand seen in late 2021’.

This strong start, together with tight supply chain management, ‘gives the board increasing confidence over the full year performance,’ said chief executive Steve Francis.

The firm has no direct exposure to Russia or Ukraine, and has seen no significant impact on its business due to the conflict, although it continues to monitor the effect on energy prices and the supply of raw materials.

Although investors can expect no dividend for 2021, as the company returns to profitable growth and cash generation it does plan to reinstate a progressive dividend policy ‘appropriately covered by underlying earnings’.

Shares highlighted SIG at 37.3p last month as a play on cutting household bills through the use of insulation products.

LEARN MORE ABOUT SIG

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Issue Date: 11 Mar 2022