Kingspan profits fall 70% to €68.1m

THE BUILDING slump, currency weakness and a once-off charge caused a near-70 per cent fall in profits at insulation and construction materials group Kingspan in 2008.

The Cavan-based group yesterday reported that sales last year were down 10.2 per cent on 2007 at €1.67 billion.

Operating profit fell by one-third to €157.1 million last year from €236.7 million in 2007. Profits before tax were down by 69.6 per cent at €68.1 million.

The group’s profit and loss account includes a €75.1 million once-off charge. Chief executive Gene Murtagh pointed out that much of this was “non-cash”.

Of this, €40 million is a goodwill impairment on its off-site division, which relies heavily on sales of metal and timber framing to new building, particularly residential.

The group said yesterday that it does not expect any recovery in this business over the next two years, and a slow move back to profitability after that point.

The other large element of the charge was a €23.9 million restructuring charge, which included €11.6 million in redundancy payments and provisions, lease obligations and plant write-downs of €12.3 million.

Kingspan said it has achieved annual savings of €76 million in overheads and labour costs. That calculation excludes raw material costs.

It cut operating costs by 5 per cent to €305.8 million. It made most of the savings in the last quarter of 2008. Kingspan said yesterday that the “year-on-year” saving would be €50 million, of which €15 million would be labour.

The group said that translating profits earned in non-euro currencies cost it €13 million at average exchange rates for 2008. Kingspan has businesses in Britain, Europe and the US.

During the year it bought Metecno, the second biggest manufacturer of insulated panels in the US, for €75 million. The business contributed €4.8 million to group operating profits last year.

Mr Murtagh told The Irish Times that Kingspan is focused on bedding this businesses into the group. He indicated yesterday that the group would still be prepared to buy businesses in the right circumstances. “We are strategically interested in the same targets,” Mr Murtagh said.

“This would not be a time to be stretching your debts, although we are very comfortable with ours. We are well capitalised, and if something were compatible and offered compelling value, then we would consider it.”