(Corrects CEO name to Stuart Mitchell, not Stuart Mitchelle
* Full-year pretax profit rises 5.3 pct
* Sales from continuing operations increase 4.4 pct
* Final div 2.40 pence, total div 3.55 pence vs 3.00
By Aashika Jain
March 13 Building materials distributor SIG Plc
said full-year underlying pretax profit rose 5.3 percent
as the UK residential construction market picked up in the
second half of 2013.
The company, which operates in Europe as well as the UK,
said it expected construction activity in the UK residential
market to remain buoyant, with the non-residential sector
continuing to be broadly flat.
Shares in the FTSE-250 component were down 0.35 percent at
200.9 pence in late morning trading on the London Stock Exchange
Employment and output in Britain's construction sector in
November was the highest since August 2007, according to
Markit/CIPS construction PMI survey.
Britain's construction industry was hit hard by the
financial crisis of 2007-09 but has been recovering since last
year thanks to record low interest rates, government programmes
to encourage people to buy new homes and falling unemployment.
SIG's underlying pretax profit rose to 88.1 million pounds
($146.3 million) in 2013 from 84.1 million pounds in 2012.
The company said full-year sales from continuing operations
rose 4.4 percent to 2.6 billion pounds, helped by favourable
exchange rates and acquisitions.
The euro firmed about 2.25 percent against the pound in
2013. SIG generates 52 percent of its revenue in Europe.
Sales in the UK, which accounts for about 48 percent of
SIG's revenue, increased 5 percent despite a 60 percent drop in
sales at SIG Energy Management, which provides insulation and
other products to improve energy efficiency.
SIG blamed the fall on the end of a European program to
reduce carbon emissions and the slow startup of other programs
aimed at improving energy efficiency in buildings.
The company's gross margin in Britain and Ireland fell 26.20
percent from 26.60 in 2012. In Europe, the gross margin
increased to 26.60 percent from 26.30.
"We continue to see a trend where the French construction
markets are in total decline, and we are outperforming the
market based on our specialist expertise," Chief Executive
Stuart Mitchell told Reuters.
Mitchell said he expected this trend to continue in 2014.
After Great Britain, France is SIG's second-largest market.
SIG said it aimed to cut purchasing costs by 1.5 percent by
2016 as part of cost-cutting initiatives launched last year.
"(The initiatives) will ensure the group combined with some
decent bolt-on opportunities will deliver better than average
profit growth over the medium term," Peel Hunt analyst Clyde
Lewis said in a note to clients.
The group sold its German underperforming roofing business
last month but retained its insulation and interiors business in
that country, which account for 17 percent of total revenue.
Like-for-like sales in Germany declined 3.4 percent due to
weak demand for industrial insulation from power stations and
the petrochemical sector, SIG said.
"We are looking hard at any underperforming business, and
that is all we have got to say at this stage," Mitchell said
without identifying any particular business.
However, he said the company was comfortable with its
portfolio and the regions in which it operates.
An analyst who attended the company's post-earnings
conference call said SIG was looking at 30-50 million pounds of
bolt-on acquisitions this year.
Mitchell told Reuters the company was looking at expanding
revenue from Poland, where key competitors Wolseley Plc
and France's Saint Gobain SA have exited the market.
SIG will pay a final dividend of 2.40 pence per share,
bringing the total payout to 3.55 pence for the year, up from
3.00 pence in 2012.
($1 = 0.6022 British pounds)
(Reporting by Aashika Jain in Bangalore; Editing by Gopakumar
Warrier and Ted Kerr)