Building products supplier SIG has warned that the end of the CERT scheme and a “likely slow start-up” of the Green Deal scheme will lead to a decline in its energy management business as it targets £10 million in cost savings in 2013.
In a trading update for the year to 1 December 2012, SIG said revenue was around £2,635, which it said was down 4 per cent in sterling, but flat on a constant currency basis when exchange rates are stripped out.
It said trading in the second half year benefited from “continued resilience in mainland Europe” and a strong performance in SIG Energy Management, as energy suppliers increased volumes to meet their CERT targets.
The board is confident that 2012 underlying profit before tax will be no less than £82m.
SIG highlighted France in particular as continuing to perform well, but said that in the UK & Ireland sales from continuing operations were down around 2 per cent in constant currency, with the UK down 1.5 per cent.
The group’s net debt is expected to have reduced to around £110m as at 31 December 2012. This is after £8m of expenditure on five infill acquisitions.
In August, SIG announced it would target a further £7m in cost savings, but has now increased that to £10m, of which around £7.5m will be found in 2013.
The company has agreed the sale of its Czech and Slovak businesses, which together account for 1 per cent of the its revenues, to the Woodcote Group, a recent management buyout from Wolseley plc, as it concentrates its management and resources in the region on strengthening its position in Poland.
It said: “SIG expects construction markets in 2013 to remain challenging and likely to decline at a rate similar to 2012. The group also anticipates a reduction in volumes for its SIG Energy Management business, due to the end of CERT and a likely slow start-up of the successor Green Deal scheme.
“Against this background, and building on recent performance, SIG expects to make further progress in 2013 by continuing to focus on sales outperformance, gross margin enhancement and improved operational efficiency.”
SIG will announce its full year results for the year ended 31 December 2012 on 7 March 2013.