Revenues at Kingspan up 15% in third quarter

INSULATION SPECIALIST Kingspan expects profits to be in line with or better than last year after an increase in sales in the third quarter despite challenging market conditions.

Cavan-based Kingspan, which develops and manufactures insulation panels, raised floors and other energy-saving building products, said that revenues were up 15 per cent in the third quarter of the year.

The group reported that overall sales for the nine months to September 30th were 6 per cent up on the same period last year at €865 million.

Based on the year to date and its order book, the company said yesterday that it expects operating profits to be in the region of €62 million to €65 million this year, compared with €62.7 million in 2009. The group had net debt of €140 million at the end of October, a €5 million increase in the €135 million debts it had on its books at the end of June. Kingspan said it expected net debt to be reduced by €10 million by the end of the year.

It also expects capital spending to be around €20 million for the year, most of which will be spent on maintenance.

Kingspan is buying building materials group CRH’s European insulation business for €120 million. The group confirmed that the deal, which is subject to statutory approval, will be completed early next year.

In a statement yesterday, the group said this would reinforce its position as Europe’s number one provider of non-fribrous insulation and give it a wider platform for growth. The purchase will have a neutral impact on earnings next year and the group expects it to boost earnings in 2012.

Kingspan said it could comfortably fund the deal from its existing bank facilities, leaving it with conservative debt ratios.

The group said the Irish market remained weak. Trade in Europe continued to improve through the year while Britain was solid, Kingspan said. The group added that its businesses in Australia continued to grow while the US remained subdued.

Insulation panel sales were strong across all of its markets, and were up 20 per cent year-on-year. The rate at which new orders came in fell from the second quarter, but were still 3 per cent up on 2009.

Insulation board sales were up 21 per cent overall, and 10 per cent excluding the impact of its acquisition in Australia. Sales of these products in Britain and key markets in Europe were strong. They continued to grow in Australia, despite a recent government decision there to end incentives to buy insulation boards.

“Looking ahead, the more positive sentiment evident around mid-year has eased back recently as the many individual national austerity programmes become factored into more tame macro forecasts for the year ahead,” the group said.

“That broad cautionary sense has also crept into expectations for the construction environment in many of the group’s markets.

“Kingspan has made clear progress in the growth of its products’ positions in many markets, although this underlying dynamic has been somewhat overshadowed by global weakness in recent years.

“This traction leaves the board confident that those foundations will deliver significant growth in the future.”