Kingspan first-half profit up 19%

KINGSPAN, THE Cavan-based building materials group that has reported a 19 per cent year-on-year increase in trading profits for the first half of 2012, expects more than half of its business to be in continental Europe next year.

Chief executive Gene Murtagh said Kingspan’s business was being affected by the ongoing crisis in the euro zone but the focus had to be on matters within group’s control.

The group continues to give priority to margin over volume. It experienced relatively strong first quarter growth but this flagged considerably towards mid-year, a change that coincided with weakening sentiment generally across Europe “driven by interminable political indecision”, it said in its review of the first six months of 2012.

Mr Murtagh said he was confident a recent €65 million acquisition in Germany could make a significant return once it had bedded in with existing operations.

The group reported a 3 per cent rise in revenue, to €757.4 million, but a 19 per cent rise in trading profit, to €52.7 million, for the six months to the end of June.

The trading margin rose from 6 to 7 per cent, the result, Mr Murtagh said, of the group’s focus on achieving a higher specification sales mix. He said it was also because measures taken since the downturn to increase efficiencies, were beginning to bear fruit.

While the trading conditions in many of Kingspan’s markets are still very uncertain, the group continued to outperform the general markets in which it operated, he added.

The board announced an interim dividend of 5 cents a share, an increase of 11 per cent year on year.

Kingspan’s insulated panels division saw its sales rise by 3 per cent and its trading profit rise by 25 per cent. The insulating boards division saw sales rise by 4 per cent and trading profit up by 7 per cent.

The access floors division saw sales rise by 20 per cent and trading profit up by 31 per cent. The group’s environmental division saw sales fall 12 per cent and trading profit remain flat.

Earlier this month Kingspan entered into an agreement to buy ThyssenKrupp Construction, which is based in Germany and is in production France, Belgium, Austria and Hungary.

Kingspan intends to use this as a platform for further penetration into key European markets.

The group has also agreed to acquire Rigidal Industries, a Dubai-based insulated roof and wall systems business.

Analysts reacted positively to the results, which were ahead of market expectations.

Davy said the stand-out feature of the figures was the trading margin while NCB also focused on the group’s strong margin performance.

“The group retains market leadership in segments of the building products market set to deliver above-trend growth over the long term and which afford the scope to generate superior returns,” it said.

The stock closed yesterday at €7.33, a rise of 1.1 per cent.