Transformation continues to deliver Results for the six months ended 30 June 2019 6 September 2019
Disclaimer: Forward-looking statements This presentation may include certain forward-looking statements, beliefs or opinions, including statements with respect to SIG plc’s business, financial condition and results of operations. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “anticipates”, “targets”, “aims”, “continues”, “expects”, “intends”, “hopes”, “may”, “will”, “would”, “could” or “should” or, in each case, their negative or other various or comparable terminology. It is believed that the expectations and statements reflected in this document are reasonable but by their nature, they involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, developments in the global economy, changes in the UK and European governments’ policies, spending and procurement methodologies, and failure in SIG’s health, safety or environmental policies and changes in the market position, businesses, financial condition, results of operations or prospects of SIG plc. No representation or warranty is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. Forward-looking statements speak only as at the date of this presentation and SIG plc and its advisers expressly disclaim any obligations or undertaking to release any update of, or revisions to, any forward-looking statement in this presentation, whether as a result of new information, future events or otherwise. No statement in the presentation is intended to be, or intended to be construed as a profit forecast or profit estimate and no statement in the presentation should be interpreted to mean that earnings per SIG plc share for the current or future financial years will necessarily match or exceed the historical earnings per SIG plc share. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this presentation does not constitute a recommendation regarding any securities . No representation or warranty, express or implied, is or will be given by, and no duty of care is or will be accepted by SIG plc, its directors or employees as to the fairness, accuracy, completeness or otherwise of this presentation or the information or opinions contained herein. Neither this presentation or any copy of it nor the information contained herein is being issued or may be distributed or redistributed directly or indirectly to or into any jurisdiction where such distribution would be unlawful. This presentation and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person. By accepting this presentation, the recipient agrees to be bound by the above provisions. 2
Transformation continues to deliver Meinie Oldersma Chief Executive Officer 3
Today’s agenda ➢ H1 2019 highlights ➢ Continuing the transformation ➢ Financial review of the period ➢ Current trading and outlook 4
H1 2019 highlights - increased profit and reduced debt • Further operational and financial progress, despite falling construction activity • Underlying PBT up 20% to £30.0m, underlying EPS up 23% to 3.7p • Like-for-like sales down 3.8% reflecting weaker market conditions and focus on profitability • Transition to smaller, more profitable base of business in SIG Distribution largely complete • Gross margin up 70bps and operating costs lower • Net debt down to £158.2m and headline financial leverage down to 1.4x (pre IFRS 16) • Previously announced review of strategic options for Air Handling division well advanced • Interim dividend of 1.25p per share 5
Our strategic vision Capital Markets presentation, November 2017 Our vision To deliver significantly improved operational and financial performance Baseline growth Capital discipline as a leading European supplier of specialist building materials Balance sheet strength Growth in line with market Investment in core Our strategic levers Selective acquisitions Operational Customer service Customer value efficiency Overheads and Pricing and product Sales and service working capital Key strategic enablers Data IT Capability Deliver improved Optimise ways of working Raise talent levels across reporting, insight and to deliver effective organisation, supported ability to make informed solutions focused on by specialist short term decisions business priorities change management Simplify, focus and deliver 6
Market backdrop increasingly challenging 60 60 Construction PMI 60 Positive confidence Positive confidence Positive confidence 56 56 56 2018 2019 2018 52 52 52 48 48 48 2018 2019 Negative confidence Negative confidence Negative confidence 44 2019 44 44 40 40 40 Jan Feb Mar Apr May Jun Jul Aug Jan Feb Mar Apr May Jun Jul Aug Jan Feb Mar Apr May Jun Jul Aug 7
Transformation delivering increased profit Underlying PBT Underlying EPS ROS ROCE +250bps +23% +20% +40bps 11.5% 3.7p 2.9% £30m 9.0% 3.0p £25m 2.5% H1 18 H1 19 H1 18 H1 19 H1 18 H1 19 H1 18 H1 19 8 Note: Data represents underlying performance pre IFRS 16.
Further margin improvement in UK & Ireland Ireland & • LFL sales decline of 12.5% reflects weaker market + Other 9% conditions and focus on profitability over volume LFL Revenue SIGD • Gross margin up 150bps to 26.4%, with continued sales SIGE £515m 57% 34% down (H1 18: £594m) focus on pricing initiatives 12.5% • Operating costs down from £134m to £121m; SIGD and SIGE successfully transitioned to more integrated functional operating models. Operating profit up 4.2% • LTM return on sales up to 4.4% (PY: 2.3%) Ireland & Other 18% • Normal seasonality expected to deliver stronger H2 SIGD Operating profit LTM 39% £15m results, subject to macro-economic risk ROS (H1 18: £14m) 4.4% SIGE 43% 9 Note: Data represents underlying performance pre IFRS 16 and excludes central costs. LTM ROS excludes property profits.
Transition in SIG Distribution largely complete Average daily sales Gross margin + £3.3m 25.1% 24.7% £3.0m 22.7% £2.6m £2.6m Q2 18 Q3 18 Q4 18 H1 19 FY 17 FY 18 H1 19 Smaller, more profitable continuing base of business 10 Note: Data represents underlying performance.
Transformation being rolled out across Mainland Europe Benelux • Top line LFL growth of 2.1% driven by France and 9% Poland Poland; trading conditions weaker in Germany 13% Revenue France LFL • Ransomware attack in France disrupted revenues, £586m 45% sales (H1 18: £583m) gross margins and costs in April and May, though up business now back on upward trend Germany 2.1% 33% • As a result, gross margin softened slightly at 24.5%; operating costs lower at £127m (H1 18: £131m) assisted by headcount reductions, principally in Benelux Germany. Operating profit 9.9% ahead 17% Poland • LTM return on sales ahead by 30bps at 3.0% (PY: Operating profit LTM 7% £17m 2.7%), despite ransomware attack ROS France (H1 18: £15m) Germany 60% 3.0% • Transformation initiatives rolled out in France and 16% Germany expected to deliver upside over the next twelve months 11 Note: Data represents underlying performance pre IFRS 16 and excludes central costs. LTM ROS excludes property profits.
France back on upward trend following ransomware attack Average daily sales • Incident occurred on 12 April • Core systems restored by mid May; all systems fully operational by end of May • Tangible impact on April and May sales, gross margins and operating profit (c.£3m £2.4m downside in France, including costs to £2.3m £2.2m remediate) £2.1m £2.0m • Performance back on upward trend £1.8m since May • Forensic review, together with additional review procedures, have confirmed no Jan Feb Mar Apr May Jun ongoing impact 12
Strong growth in Air Handling Air • First half year trading as combined Air Handling Handling division, encompassing SIG Air Handling (Mainland LFL Revenue Europe), Ouest Isol & Ventil (France) and SK Sales £159m sales (UK) (H1 18: £151m) up • Strong H1 growth, with LFL sales up 7.6% 7.6% • Gross margin of 38.8% (H1 18: 37.8%) • YoY reduction in operating profit of £1m reflecting Air impact of ransomware attack (additional c.£2m Handling impact in OIV) and Q1 pre turnaround at SK Sales LTM Operating profit • Previously announced review of strategic options well ROS £9m advanced. Further update when appropriate 5.8% (H1 18: £10m) 13 Note: Data represents underlying performance pre IFRS 16 and excludes central costs. LTM ROS excludes property profits.
Recommend
More recommend
