U.K. Building Suppliers Hit as SIG Profit Warning Adds to Slowdown Concerns

(Bloomberg) -- Shares of U.K. construction suppliers slid after a profit warning from SIG Plc provided the latest sign of a weakening industry outlook amid concern over slowing growth and Brexit.

The vendor of roofing materials, insulation products and partition walls saw its stock plunge as much as 27%, the most in a decade, after saying that adjusted profit would be below previous expectations as “political and macro-economic uncertainty” contributed to a further weakening in trading conditions.

Stocks including building merchant Travis Perkins Plc, kitchen-designer and fitter Howden Joinery Group Plc and B&Q-owner Kingfisher Plc fell in sympathy as analysts warned of a read-across for peers.

“The macro backdrop in the U.K. seems to have become incrementally more difficult and the trends will likely continue to worry the markets about a more widespread weakening into 2020,” Aynsley Lammin, building and support-services analyst at Canaccord Genuity, said by email.

Lammin noted that recent U.K. construction and manufacturing purchasing managers’ index data already suggests the macro backdrop remains fragile. Declining services PMI is even more worrying given its relative importance for the U.K. economy, he said.

SIG’s update came on the same day that mortgage lender Halifax warned that U.K. house prices are growing at the slowest rate in more than six years. Persimmon Plc and Berkeley Group Holdings Plc were among homebuilders declining by more than 1% on Monday.

SIG was trading down 14% at 11 a.m. U.K. time.

To contact the reporter on this story: Joe Easton in London at jeaston7@bloomberg.net

To contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, Paul Jarvis

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