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Home Improvement Shares Fall Following SIG Profit Warning

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SIG plc, a leading supplier of specialist building materials to trade customers across Europe, today issues a trading update covering the period since the announcement of the 2019 half year results on 6 September 2019, together with an outlook for the full year 2019.

The Group has been reporting during the year a deterioration in the level of construction activity in key markets and highlighting a number of key indicators pointing to further weakening of the macro-economic backdrop, notably in the UK and in Germany. This deterioration in trading conditions has accelerated over recent weeks, and political and macro-economic uncertainty has continued to increase. 

Management is taking ongoing actions to address the continuing market weakness.  Further benefits from transformational initiatives and the Group's normal seasonality are still expected to deliver a stronger second half. However, the recent further weakening of the trading backdrop as the Group has entered its traditionally strongest trading months of the year means that the Board is now anticipating, in both the specialist distribution and roofing merchanting businesses, significantly lower underlying profitability for the full year than its previous expectations. 

The Group is today separately announcing that it has entered into agreements following competitive processes to sell its Air Handling Division and also its Building Solutions business, which when completed will significantly strengthen the Group's balance sheet.

Builders Merchants

Share prices for Howdens, Kingfisher, SIG, Travis Perkins and other UK builders merchants and construction suppliers declined, following the announcement.  

The UK Construction Purchasing Managers' Index continues to indicate a decline in the sector and Halifax data shows that house prices are growing at the slowest rate in over six years.

Analysts are concerned that weak trading conditions, amid a backdrop of political and economic uncertainty, will have a widespread effect on the market going into 2020.

Source : Insight DIY Team and SIG Plc

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08 October 2019
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