SIG PLC (Reuters) - The head of British building materials suppler SIG (>> SIG plc) is stepping down after the company said it would miss 2016 profit forecasts due to weak demand, tougher competition and delays to some projects after Britain's vote to leave the European Union.
Shares in the insulation, roofing and interior fittings firm plunged as much as 24 percent to a four-year low of 88.2 pence on Friday, and are on track for their worst day ever.
While Britain's economy has generally fared better than expected in the wake of the June 23 "Brexit" vote, the construction and building repairs market has been hit hard, with surveys showing the sector has suffered its sharpest downturn in seven years since the referendum.
Heating and plumbing products supplier Wolseley (>> Wolseley plc) and building materials supplier Travis Perkins (>> Travis Perkins plc) have both announced cutbacks to their businesses.
SIG said it had been hit by delays to some commercial sector projects, subdued demand for technical insulation in the petrochemical and manufacturing sectors, as well as weakness in the UK repair and maintenance market.
The company forecast underlying pretax profit of 75-80 million pounds for 2016, below analysts' average forecast of 91.5 million, according to Thomson Reuters I/B/E/S, and comparable 2015 profit of 87.4 million.
"An increasingly sporadic construction market in the UK is proving difficult for all the quoted building merchants," Panmure Gordon analyst Adrian Kearsey wrote in a note. The brokerage has a "buy" rating on the stock, but cut its target price to 135 pence from 165 pence.
SIG said CEO Stuart Mitchell was stepping down immediately and non-executive director Mel Ewell, a former head of infrastructure services firm Amey, would become interim CEO.
The company reported a 1 percent fall in like-for-like sales in UK and Ireland from July to October, reducing the increase for January-October to 0.8 percent.
Four-month comparable sales in its unit that provides insulation fell 1.2 percent, and slipped 1.7 percent in its roofing products business.
September and October are SIG's two largest trading months, Peel Hunt analysts wrote, adding the challenging trading backdrop was likely to mean 2017 would be a year of "little or no progress" in profits.
At 1050 GMT, SIG shares were down 20 percent at 92.55 pence.
(Reporting by Rahul B and Esha Vaish in Bengaluru; Editing by Jason Neely and Mark Potter)
By Rahul B and Esha Vaish
