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UPDATE 1-SIG to sell assets, names new CEO to lead turnaround
March 14, 2017 / 9:07 AM / 6 months ago

UPDATE 1-SIG to sell assets, names new CEO to lead turnaround

* Hires new CEO from industry products firm Brammer

* Like-for-like sales up in Nov-Dec, 2017 trading in line

* Shares jump almost 9 percent (Adds details, analyst comments)

By Esha Vaish

March 14 (Reuters) - British building materials supplier SIG named a new CEO on Tuesday, and said it planned to sell assets and review costs as it battles to recover from weak trading in its UK insulation, interiors and offsite construction businesses.

SIG’s shares jumped almost 9 percent as it reported some signs of improvement, with like-for-like sales up in November and December and trading in line with its expectations for the first two months of 2017.

The company said Meinie Oldersma, currently head of industrial products distributor Brammer Ltd, would join as chief executive in April, bringing experience in helping turn round and grow businesses across Europe.

SIG’s former boss stepped down after a profit warning in November blamed on weak demand, tougher competition and delays to some projects after Britain’s vote to leave the European Union.

Analysts say the company’s long-running drive to find more efficiencies and expand in ecommerce had distracted it from day-to-day operations, resulting in below par sales growth and weaker margins.

“Since November we have slowed or stopped a number of internal initiatives, which will allow our team to refocus on customers and sales growth in order to generate cash ... This will ensure that we build on SIG’s significant potential in 2017,” interim CEO Mel Ewell said in a statement.

SIG said it was reviewing its cost base to eliminate duplication and reduce discretionary spending, and that it would sell some assets to reduce debt, which forced it to cut the 2016 dividend to 3.66 pence per share from 4.60 pence a year earlier.

The company reported a 12.5 percent fall in underlying pretax profit to 77.5 million pounds ($94.1 million) for last year, in line with its forecast after the November warning.

Jefferies analysts welcomed the refocused strategy and new CEO, nudging up their 2017 pretax profit forecast by 1 million pounds to 76.6 million. They have a “hold” rating on the stock.

SIG said markets remained competitive and it was experiencing some supplier price inflation, particularly in its UK insulation and interiors businesses.

The weaker pound since June’s Brexit vote has pushed up UK import prices. Earlier this month, building materials supplier Travis Perkins warned of rising costs and pressure on discretionary spending.

$1 = 0.8237 pounds Reporting by Esha Vaish in Bengaluru; Editing by Mark Potter

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