KINGSPAN, the Cavan based building materials group, may make an offer or Ward Building Systems, a British building materials subsidiary of the Rugby Group.
Mr Eugene Murtagh, Kingspan's chairman, announcing continued strong profit growth in 1995, noted that Ward was "in play" and that Kingspan was interested. He said that Kingspan was an underbidder three years ago when Rugby acquired the company. Rugby was now divesting itself of Ward "so naturally we are interested".
Kingspan has not indicated what it would be prepared to pay for Ward. However, it would represent a major move for Kingspan. Ward is in a similar business to Kingspan and is understood to generate around £5 million in profits. This compares with Kingspan's £6.1 million in 1995, a 29 per cent increase on the £4.7 million generated in 1994.
Announcing the strong profit growth for 1995, Mr Murtagh said that Kingspan anticipated further growth this year. Trading in the first three months was in line with expectations and Kingspan said it was no less optimistic than at this time last year.
The recent acquisition of S & D, a Northern Ireland manufacturer of polyethylene bulk containers, has been "turning in good profits" in the first quarter. There will be a 10-month contribution from S & D this year.
Kingspan said there should not be any slowing in demand for its products this year. It noted that British construction orders have staged a recovery but pointed to the "false dawn in 1994". Nevertheless, private, industrial and commercial orders in Britain, the areas most relevant to the group, did remain positive in 1995 and this trend is likely to continue.
The latest results show a rise in sales from £70.07 million to £83.36 million, with underlying profit growth of 23.6 per cent.
Reflecting real growth, earnings per share improved from 14.6p to 8.7p. Shareholders will benefit from the higher profitability. A final dividend of 2.3p net per share has been declared, making a total of 3.7p, an increase of 23 per cent.
The group described the latest results as satisfactory considering that all its markets, except Ireland, were sluggish.
It has moved from niche to mainstream markets. One area is the move to composite panels from the traditional "built-up" systems. The marketing cost of this switch is reflected in increases in administration costs from £8.82 million to £9.96 million. This move, said Kingspan, was to make the group "synonymous with composite panels" in Britain and Ireland.
Its European strategy, which is concentrated in the Benelux and German markets, was the "best approach" in the medium term. The acquisition of the remaining 50 per cent of the Dutch subsidiary and the takeover of a small Belgium distributor "will significantly" improve its position in these markets, according to the group.
