Shares of SIG plc (LON: SHI), a Sheffield-based supplier of insulation, roofing, commercial interiors and building products, rose 5.6% Friday after the company reported higher annual revenue and a reduced loss for 2021.
SIG Returned to Underlying Profit in 2021
SIG plc had an underlying pre-tax profit of £19.3million, compared to a loss of £71.6 million the previous year.
The company reduced its pre-tax loss to £15.9 million for the full year from £194.6 million in 2020. It posted a 22.4% increase in revenue to £2.29 billion from £1.87 billion the previous year.
SIG attributed this growth to a strong recovery from the impact of COVID-19 in 2020. The effective execution of its return-to-growth strategy, market share gains, margin discipline and inflationary tailwinds also contributed to the result.
CEO Commentary
SIG CEO Steve Francis said, “2021 was a pivotal year – accelerating progress on our strategy has returned the Group to profitability ahead of expectations, delivering above market growth rates and consistent margin improvement, the result of record performance in France and Poland, and strong turnaround in the UK. In uncertain times, SIG demonstrated in 2021, as it has in previous decades, its ability to manage successfully through inflationary and volatile market conditions, thanks to our strong relationships with suppliers and customers, and the quality of our people. Growth momentum, resilience of our businesses, and experienced leadership all underpin our confidence in the organic growth path towards 5% underlying operating margin in the medium term.”
Dividend
The company said that no dividend will be paid for 2021, but the board reiterated its medium-term commitment to return to a progressive dividend policy, suitably covered by operating income.
Wall Street’s Take
Three months ago, Jefferies analyst Priyal Woolf kept a Hold rating on SHI and raised its price target to 53p (from 50p). This implies 34.8% upside potential.
Overall, SHI scores a Moderate Buy consensus rating among analysts based on one Buy and one Hold. The average SIG plc price target of 56.50p implies 43.7% upside potential to current levels.
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