Kingspan continues to shake off Brexit concerns

Kingspan has signalled to analysts that it is continuing to shake off the impact of Brexit, while it is on the lookout for potential takeover deals in Mexico and Brazil.

Since the end of June, the insulation panel maker has been asked to pitch for between 5 per cent and 6 per cent more project work in the UK compared to the same period last year, according to Shane Kelly, an analyst with Cantor Fitzgerald, who met the company's management team last week.

While Mr Kelly said this is a “softer indicator than confirmed work”, it does show that Kingspan’s UK activity is “solid” following Britain’s decision to quit the EU on June 23rd.

“This is encouraging in our view and we would also note [non-residential activity] which represents about 80 per cent of Kingspan’s UK exposure still remains 30 per cent below financial crisis levels,” he said. “So, any fall off will likely be less severe than what was seen in 2008.”

Shares in the group, led by chief executive Gene Murtagh, which fell by more than 27 per cent in the days after the UK vote, have since rallied strongly. They closed on Monday in Dublin at €24.49, some 2.4 per cent below their pre-Brexit level.

Revenues up

Kingspan, which has operations in Europe, North America, the Middle East and Australia, reported last month that its revenues rose 19 per cent to €1.47 billion in the first half of the year, compared to the same period in 2014, while pre-tax profits jumped 54 per cent to €154.8 million.

Kingspan’s management, who have committed to €209 million on acquisitions in the first six months of the year, signalled an interest in doing deals in Mexico and Brazil, said Mr Kelly. The company also flagged Singapore, Malaysia and Indonesia as locations for potential activity, he said.

Management were also upbeat on the company’s prospects in the US, he said.

“The group’s balance sheet remains robust,” Mr O’Kelly said, noting that its net debt, at €348.1 million, stands at just 0.9 times earnings before interest, tax, depreciation and amortisation.

The analyst sees Kingspan reporting full-year revenues of €3.1 billion, up from €2.77 billion in 2015.