Among the major news on UK stocks, SIG PLC (GB:SHI) plunged over 10% as of writing, after the company issued a profit warning in its latest trading update. The company experienced weaker-than-anticipated trading in recent weeks and holds a cautious outlook for the second half of 2024. As a result, it expects its full-year underlying operating profit for 2024 to fall within the range of £20 million to £30 million. This is lower than the analyst consensus range of £36.7 million to £43.0 million as of June 21, 2024.
SIG is a supplier of specialized construction and insulation products across Europe. Year-to-date, SHI stock is trading down by 26%.
Highlights of SIG’s Trading Update
According to SIG’s update, like-for-like (LFL) sales declined by approximately 7% in May and June so far as compared to the same period last year. The company noted that challenging market conditions, such as weak demand in the building and construction sectors, have continued this year as well. In 2023, the company experienced a significant decline in operating profit, plummeting by over 90% to £4 million compared to the £56.2 million reported in 2022.
The company’s markets in France and Germany, along with the UK Interiors business, have been hit the hardest, while the demand in Poland, Ireland, and the UK Exteriors business remains solid.
To navigate smoothly during these tough times, SIG stated its commitment to driving cost reductions and efficiency initiatives, to facilitate higher profitability as markets rebound.
In terms of outlook, the company now expects to report an LFL sales decline of approximately 7% in the first half of 2024 and an underlying operating profit within the range of £10 million to £12 million.
The company will announce its first-half results for 2024 on August 6.
Are SIG Shares a Good Buy?
SHI stock has received a Moderate Sell consensus rating on TipRanks based on two Holds and one Sell recommendation. The SIG share price forecast is 27.37p, which is 12.6% higher than the current trading level.
