SIG (LON:SHI) reported a resilient first half of 2026 despite weak construction markets and weather disruption early in the year, with trading returning to like-for-like growth in the second quarter and management reiterating plans to improve profitability, cash generation and leverage through self-help measures.
Chief Executive Officer and Chair Designate Pim Vervaat said the group’s first-quarter performance was affected by poor weather, while the second quarter showed like-for-like growth versus the prior year. He also highlighted the return of the Benelux business to profitability and further cost savings across the group.
First-half sales and profit affected by weak demand
CFO Simon Kesterton said like-for-like sales declined 1.5% in the first half as weak demand and poor weather in January and February weighed on volumes. Revenue was just below £1.3 billion, compared with just over £1.3 billion in the prior-year period.
Underlying operating profit declined to £10.5 million from £15 million, while the operating margin fell 40 basis points to 0.8%. Kesterton said a competitive environment, as businesses pursued limited demand, contributed to the lower margin.
Volume declines reduced operating profit by £6 million, although pricing added £2 million as the company passed through cost inflation. SIG recorded approximately £6 million of overhead cost inflation in the first half, but delivered £10 million of benefits from management actions.
- About £3 million of management-action benefits came from restructuring and branch-closure projects.
- A further £3 million came from increased procurement efforts.
- The remaining benefits came from overhead and property initiatives.
Kesterton said the group experienced a material improvement after the first two months of the year: volume effects were £9 million negative in January and February but £3 million positive over the subsequent four months.
Cash flow and financing position
SIG recorded underlying EBITDA of £51 million in the first half and generated £11 million of operating cash flow, representing 104% conversion of operating profit. However, interest and financing payments of £26 million resulted in a free cash outflow of £16 million.
The company said the cash outflow reflected normal working-capital seasonality, including investment in inventory ahead of price rises. It reported an £8 million working-capital inflow, partly supported by improvements in receivables and other working-capital items.
At the end of the period, SIG had £64 million of cash and an undrawn £90 million revolving credit facility, giving total liquidity of £154 million. Its long-term funding includes €300 million of senior secured notes due in October 2029. Net debt totaled £532 million, including £322 million of IFRS 16 capitalized leases, leaving leverage at five times net debt to EBITDA.
Kesterton said the group has no near-term financing issues, but intends to reduce leverage to below three times EBITDA. SIG is targeting at least £100 million of cash generation by the end of 2027, which Kesterton said should be viewed as at least £100 million lower net debt. The company also said potential disposal proceeds could total up to £40 million, although it did not provide a detailed breakdown of the cash-generation target because of interdependencies among the actions.
Mixed performance across markets
Vervaat said SIG no longer has any loss-making divisions following the Benelux turnaround, although market conditions remain difficult in the U.K., France and Germany. He identified Ireland, Poland and the Netherlands as brighter areas during the first half.
France remained challenging, though trading partially recovered in the second quarter. SIG closed its Lyon branch and introduced an artificial intelligence-powered quoting tool, La Bonne Réponse, which Vervaat said reduced quotation preparation time from more than six hours to 30 minutes while improving quote quality.
Germany saw a 5.5% market decline, according to Vervaat, but SIG limited its operating-profit reduction to 0.7% through cost reductions. The company is also investing in omnichannel capabilities and selected regions, while considering further cost actions.
In Poland, where harsh winter conditions affected construction activity, SIG recovered to 4% year-over-year growth in the first half and continued to gain market share. Benelux returned to profit after a multiyear reorganization, though its results still included approximately €0.5 million of losses from MPA, a Belgian subsidiary that SIG has announced it will close in the second half.
U.K. and Ireland Interiors regained market share, with Ireland improving profitability. However, Vervaat said the U.K. insulation and dry-lining market remains highly competitive, particularly due to weak housing new-build activity and a softer high-rise market in southeast England. Further cost measures are under consideration.
U.K. Roofing outperforms market
U.K. Roofing was SIG’s strongest first-half performer, generating £7.3 million of operating profit and 1.7% like-for-like growth. Managing Director Chris Lodge said the unit outperformed its market by an estimated 4%, despite forecasts indicating private new-build and private repair, maintenance and improvement volumes were down 10% and 8%, respectively.
The division operates 108 locations and employs 920 people. Lodge said it generated £6 million of free cash flow and improved its operating margin despite cost inflation. He expects roofing demand to remain challenging throughout 2026, but said the business will focus on customer service, digital capability, selective network expansion and solar-related opportunities.
Lodge said SIG sees solar as a growth area and is training roofers to provide solar solutions, while recognizing that solar panels can displace traditional roofing-tile demand.
Vision 2030 targets self-help-led improvement
SIG is targeting a £50 million operating-profit run-rate improvement by mid-2028, driven by procurement savings, back-office simplification, organizational efficiencies, footprint optimization and market-share gains. The company said procurement alone is expected to provide a further £25 million of benefits.
Management stressed that the plan does not depend on a market recovery. Vervaat said SIG is accelerating actions to simplify its business, property and branch portfolios, while expanding the use of AI in pricing, customer service, procurement, inventory and supply-chain management.
The group continues to target operating margins of 3% to 5% through the cycle. Kesterton said reaching the bottom of that range by the end of 2028 could be tight, though the company could be closer to it during 2029 as the improvement program reaches a fuller run rate.
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.
