Insulation and roofing products firm also battling to grow top line

Shares in materials firm SIG slumped more than 20% today after the firm warned its profit for 2019 will be markedly lower following what it called 鈥渙ngoing deterioration鈥� in its construction activities.

Signage

In a trading update, the FTSE250 business said underlying profit before tax for the year to 31 December 2019 would be around 拢42m, down from a potential 拢63m.

It also said group turnover would be 6% lower at around 拢2.5bn.

In 2018 Sheffield-based SIG reported pre-tax profit of 拢73m, up 25%, on turnover of 拢2.7bn, down 1%.

SIG is currently selling off its air handling and building solutions businesses, deals it expects to complete by the end of the first quarter this year.

It will receive a net total of around 拢204m for both units, it said.

The group said several 鈥減rofit protection actions鈥� it kicked off last autumn would boost 2020鈥檚 figures, and not 2019鈥檚 numbers, as expected.

It said its main challenge in 2020 was restoring growth to its turnover.

鈥淢anagement is taking a number of actions to address sales performance which, coupled with profit protection actions taken in recent months and the annualised benefit of the broader transformation, will leave the group well placed to capitalise on any recovery in trading conditions,鈥� it added.

Cenkos analyst Kevin Cammack said the firm鈥檚 decision to pare back business was having a detrimental impact. 鈥淭he danger is you hack of some by saying you don鈥檛 want their business anymore. You end up losing presence in the market and the rebating structures you have in place.鈥�

Two years ago SIG admitted its profit figures for 2016 and the first half of 2017 had been overstated by a total of more than 拢6m.

The Financial Reporting Council told 好色先生TV its investigation into the audit by Deloitte of SIG鈥檚 2015 and 2016 accounts, which was launched in June 2018, was still ongoing.

In 2018 SIG sold its 拢9m offsite operation, SIG 好色先生TV Systems, to modular developer Urban Splash for a nominal sum of 拢1.

At the close of trading today SIG鈥檚 shares stood at 94p, down 21%. The stock鈥檚 12-month high was in May, when shares hit 153p.

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