SIG sets out supply chain efficiency plans

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SIG, the distributor of specialist building products, has accelerated its supply chain and procurement efficiency programmes and expects more than £13m in savings this year.

In a trading update, the group said that weaker than anticipated trading conditions and intensified competition meant that it now expects that underlying profit before tax for the year ending 31 December will be in the range of £75 million to £80 million.

The moves reflect a downturn in the construction market. In October, Travis Perkins the builders’ merchant group, set out plans to close ten of its smaller distribution and fabrication centres as part of a plan to optimise its network in the face of uncertain future demand.

And, in September, plumbing and heating company Wolseley also outlined plans to prune its UK network in a £100 million “UK turnaround and repositioning” plan.

SIG has been reviewing its UK branch network and cost structure. It said this would provide it with annualised net savings of some £10 million, with an exceptional charge of about £10 million.

These efficiencies are in addition to previously disclosed targets and mean that the Group is now targeting savings of at least £20 million in 2017.

SIG’s trading statement said that group revenues in the period increased 10.6 per cent over last year, but on a like -for -like basis group sales declined by 0.8 per cent in the period.

In the UK, the group has been impacted by delays to some projects in the commercial sector and subdued demand for technical insulation in the petrochemical and manufacturing sectors.

“In the UK & Ireland LFL revenues decreased 1.1 per cent in the period, with SIG Distribution and SIG Exteriors recording LFL sales declines of 1.2 per cent and 1.7 per cent respectively Following a slowing of activity around the time of the EU referendum, trading conditions in the UK have continued to soften and competition in the market has intensified.”

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