SIG Q4 Earnings Call Highlights

SIG (LON:SHI) reported flat full-year sales in its 2025 trading update, as subdued construction demand persisted across key markets and did not improve in the second half. Speaking on the company’s full-year trading update and strategy framework call, Group CFO Ian Ashton said volumes rose 1% year over year, while pricing was a net headwind, and noted that trading conditions softened slightly in the fourth quarter in the U.K., Germany, and Ireland.

Despite the difficult backdrop, management said the group continued to perform well relative to its end markets and believes it is taking share in most areas. The company will publish full-year results on March 4, when it expects to provide more detailed financial information and outlook.

2025 trading: profit up, cash outflow narrows focus to efficiency

Ashton said group operating profit increased by GBP 7 million to GBP 32 million, in line with market expectations. He attributed the performance in part to nearly GBP 40 million of cost reductions achieved during 2025, which were described as offsetting inflation and translational impacts.

Free cash flow for the year was an outflow of GBP 12 million. Ashton characterized the result as “pretty solid” given currently depressed margins, and pointed to “very encouraging progress” on working capital initiatives.

On the balance sheet, year-end liquidity was reported at just over GBP 170 million, with leverage flat year over year at 4.7x. Ashton emphasized that the group’s GBP 90 million revolving credit facility remained undrawn throughout the year.

Business highlights and organizational changes

Management highlighted continued strength in the business previously reported as U.K. Interiors (insulation and dry lining). Ashton said the unit delivered growth of 8% in the first half, 3% in the second half, and 5% for the full year, calling it a “very positive performance” and saying the recovery remains well on track despite market conditions.

In the fourth quarter, SIG removed the management structure supporting its U.K. Specialist Markets. Ashton said the move provided cost benefits and was intended to improve management accountability, with the goal of better exploiting opportunities in smaller specialist businesses and increasing synergies across the portfolio.

CEO and chair designate Pim Vervaat also noted that SIG closed a relatively small business called Mayplas in December as part of ongoing simplification efforts.

CEO’s first 100 days: portfolio complexity and digitization opportunity

Vervaat, who became CEO and chair designate on October 1, said his first 100 days brought “no real surprises,” citing a strong and experienced management team and resilience across the organization during tough trading conditions.

He described SIG as a diverse group spanning insulation and dry lining distribution, roofing businesses across multiple countries, manufacturing operations, and niche businesses. He estimated the group has roughly 20 product-market combinations and said this diversity supports the case for a decentralized operating model.

Vervaat also said SIG is in the “early phase” of digitization and AI adoption, which he views as a source of upside. He pointed to omnichannel capabilities in Poland as an advantage that has been rolled out to other countries. Separately, he said simplifying the portfolio could create additional value.

“Vision 2030”: operating leverage and portfolio optimization

Management outlined a “Vision 2030” strategic framework centered on two pillars:

• Optimizing operating leverage, including continued market share gains, ongoing review of the branch footprint (both closures and openings), further overhead efficiencies at group and divisional levels, procurement improvements, and continued working capital focus.
• Optimizing the business portfolio, with management assessing each product-market combination on a three- to five-year view to determine the best route to create value, both organically and inorganically.

On procurement, Vervaat said SIG spends around GBP 2.5 billion annually and believes further gains are possible. The company hired a new Chief Procurement Officer, Darren Evans, who previously worked with Vervaat at RPC Group and later at Berry Global, where he oversaw large-scale procurement. Vervaat said SIG had already identified “single-digit million” savings opportunities in the fourth quarter and plans to provide more detail in March.

During Q&A, management addressed investor questions about whether procurement had been attempted before. Both Vervaat and Ashton said SIG is not centralizing procurement; instead, the approach is to add coordination across operating companies. Ashton added that the team is aware of prior missteps involving “over-centralization” and believes the current model is better suited to the group.

On supplier concentration, Ashton said SIG’s top suppliers represent a “big” share of procurement spend, suggesting around 60%–70% for the top suppliers discussed, and noted that SIG holds supplier forums to explain its plans and maintain relationships. Management did not provide a specific annual procurement benefit target on the call, saying it expects to provide a range and more precision in March.

Financial targets and near-term priorities

Looking ahead, management framed 2026 and 2027 as a period focused on maintaining robust liquidity, removing costs, and improving working capital efficiency in preparation for a market recovery. Vervaat said SIG intends to align the portfolio more closely to structural growth markets while continuing to outperform underlying markets.

By 2030, SIG said it aims to build a “best-in-class distribution platform” in building materials. Vervaat noted that the U.K. roofing business won the National Merchant of the Year award in September.

The company also introduced an operating margin ambition of 3%–5% through the cycle, paired with the goal of robust and predictable cash generation. Ashton said the updated framing reflects the starting point after two years of subdued demand and higher-than-normal operating expense inflation, while remaining confident the group can reach 3% in “relatively short order” with some market help, and that 5% remains achievable. He added that some growth is needed to reach 3%, as distribution models rely on volume recovery, and said portfolio optimization could help given the variation in margins across the group’s businesses.

About SIG (LON:SHI)

SIG is a leading pan-European provider of specialist insulation and sustainable building products and solutions, differentiated through specialist knowledge, product mix and end markets.

We connect over 75,000 customers with thousands of leading and specialist products and brands from our suppliers. We use our network of around 430 winning branches across local markets with superior customer service, specialist expertise and on-time delivery to add value to both our customers and suppliers.