SIG plc (LON:SHI), a distributor of specialist building products in Europe, saw its stock up 9.33 percent at the London Stock Exchange Tuesday after it released its full year 2016 results.
SIG was trading at GBP117.50 Tuesday afternoon, with 10.6 million shares exchanging hands. The stock’s range for today was 111.80 – 120.30 a share.
SIG’s stock gained following the release of the company’s 2016 full year result Tuesday, which showed revenue up 11.2 percent to GBP2.739 billion from GBP2.463 billion a year earlier.
Underlying operating profit, however, dropped 8.6% to GBP91.3 million from GBP99.9 million while profit before tax plunged by 12.5% year-on-year to GBP77.5 million.
“Although the Board believes that the Group’s strategic direction is correct, implementation has proved challenging. Accordingly, since November we have slowed or stopped a number of internal initiatives, which will allow our team to refocus on customers and sales growth in order to generate cash and improve ROCE. This will ensure that we build on SIG’s significant potential in 2017,” said Mel Ewell, SIG’s Chief Executive.
The Group delivered an underlying PBT of GBP77.5m in 2016, in line with its previously stated £75-80m range.
However, SIG recognises that its transformational change programme, while taking the Group in the right strategic direction, distracted the business during 2016. This resulted in a loss of customer focus and impacted performance.
Leverage has risen above an acceptable level and specific performance challenges were seen in SIG distribution (“SIGD”), the UK insulation and interiors business, and in the Offsite Construction business in the UK.
SIG has identified that it needs to balance better its change programme with the day-to-day operations of the Group. Since November, therefore, SIG has reassessed its internal initiatives in order to free time so that branches can refocus on customers and drive sales growth.
As a result, the company has slowed or stopped a number of initiatives. It has reviewed its UK eCommerce programme, suspended its Regional Distribution Centre (“RDC”) programme, and is targeting to complete substantially the roll-out of its new UK ERP system in April.
It has also reviewed its cost base to eliminate duplication and reduce discretionary expenditure. – BusinessNewsAsia.com