The company, which supplies insulation, energy management and roofing products, expects to layoff more staff this year due to sluggish construction markets in the UK, Germany and France.

It also said that it was considering options for its air handling unit, which provides services to improve air quality, and would speed up restructuring plans in France and Germany and at its UK exteriors business, which supplies roofs and windows.

Recent restructuring efforts offset weak revenues to drive a 25 percent rise in annual profit, as costs savings and price hikes across a range of products paid off.

However, the company forecast a decline in continuing like-for-like sales in the first half of 2019, sounding a cautious note compared to other companies in the sector.

LafargeHolcim Ltd, the world's largest cement maker, on Thursday said the market for building materials was resilient, while France's Saint-Gobain still expects growth in Europe.

An upturn in commercial and infrastructure activity and an expansion in house building, driven by low interest rates and strong demand, was reflected in a rise in IHS Markit's euro zone construction PMI to 52.6 in February, from 50.6 in January. Germany saw a particularly strong rise.

SIG said its revenues in Germany were partly hit by efforts to reduce exposure to low margin businesses. It has introduced a new pricing framework in Germany and is testing the same in France.

It said the UK construction market became increasingly challenging towards the end of 2018, with commercial construction demand dampened by macro-economic uncertainty, smaller house price rises and a slowdown in sales.

SELF-HELP

Shares in the FTSE 250 company rose as much as 11 percent before paring gains to stand 8.5 percent higher at 1140 GMT

"Self-help work done in 2018 will carry into 2019, giving management confidence that the group can make significant progress in 2019, in spite of market headwinds," Liberum analysts said in a note.

They said the stock was undervalued and have a "buy" rating with a price target of 157 pence, compared with a analyst median of 128 pence.

Davy analysts, who are "neutral" on the stock, said they expect a sizeable improvement in SIG's trading profits in 2019 to 104 million pounds, from the current 90.6 million pounds.

Underlying pretax profit, excluding property profits, rose to 72.7 million pounds, for the year ended Dec. 31, from 58.1 million pounds. Gross margin rose 50 basis points.

Revenue fell 1.2 percent to 2.68 billion pounds.

(Reporting by Arathy S Nair in Bengaluru; Editing by Shounak Dasgupta, Bernard Orr and Kirsten Donovan)

By Arathy S Nair and Tanishaa Nadkar