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Britain's SIG eyes strong earnings but supply snags to persist

(Reuters) -Building materials supplier SIG on Tuesday predicted its annual earnings would top expectations but joined other British companies in warning that severe supply constraints will likely persist for several months.

SIG, which sells roofing and insulation materials in Britain and a handful of European countries, said trading was “solid” during July-August despite the supply disruptions, which are being worsened by a shortage of truck drivers.

The Sheffield-based company said it expected full-year underlying operating profit above prior expectations, provided current supply constraints do not worsen.

Shares in SIG were 1.6% higher at 50.65 pence by 0835 GMT on the London Stock Exchange.

Analysts at Jefferies raised their estimates for SIG’s 2021 profit to 32 million pounds ($43.8 million) from 25 million, predicting stronger profit margins from France and Germany. SIG had reported a loss of 43.2 million pounds in 2020.

Globally, businesses across industries have been hit by supply bottlenecks at ports and warehouses and a raft of companies in Britain have said the issues are leading to higher costs and could weigh on earnings.

Home improvement retailer Kingfisher warned on Tuesday its suppliers were challenged by high order levels, and flagged supply issues at its building materials and outdoor ranges businesses.

SIG posted an underlying operating profit of 13.6 million pounds for the six months ended June 30, compared with a loss a year earlier.

($1 = 0.7309 pounds)

Reporting by Aby Jose Koilparambil and Sachin Ravikumar in Bengaluru; editing by Uttaresh.V, Rashmi Aich and David Evans

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