SIG counts the cost of building slump

Home insulation group SIG may have profited handsomely from the Government's green campaign to clad more heat-wasting houses, but it has not been able to stave off the impact of recession in the building market.

Today it warned that profits would be slumping to the very bottom end of City expectations for the current year as business volumes in the UK remained subdued and pricing pressures were holding back profitability.

Before today, analysts had pencilled in underlying profits for the current year of between £63 million and £99 million.

However, the usual increase in building activity at this time of year across Europe has not materialised, so the group's sales have been slow to pick up.

SIG warned in May that the extremely cold weather conditions on the continent had hit demand badly.

To combat the downturn it has been axing costs, and has so far brought in measures including 1900 redundancies, to save an annual £62 million a year. Recent cuts will take a further £8 million of costs out of the business, it added.

Shares in SIG fell 26p to 89p on the news this morning.