Housing slump to hit Kingspan earnings

Cavan-based construction group Kingspan said the housing slowdown and rising raw materials cost would mean reduced earnings this year.

Ahead of its agm in Dublin today Kingspan issued a statement said trading over the first four months of the year has been challenging due primarily to the slowdown in residential construction in Ireland and the UK.

Offsetting this was the relative strength of office construction and the North American market.

The impact of exchange rate movements between the US dollar, sterling and the euro has seen sales revenue decline 6 per cent, although the company said at constant exchange rates revenues were in line with 2007.

The cost of raw materials costs, particularly steel was increasing and Kingspan said there is likely to be a time lag in its recovery of these costs.

Looking forward Kingspan said ordered for its insulated panels in the UK and Ireland are down 16 per cent, but said this was off-set against strong order growth from Central and Eastern Europe.

To counter rising costs Kingspan says it is continuing to reduce costs, including "some plant closures and headcount reductions in the UK and Irish offsite businesses".

Work is ongoing on its investment programme in new technology with a new new insulated panel line and a new insulation board line due to be commissioned in the UK in the second quarter. Kingspan said it was also increasing capacity in Canada, Poland and the Netherlands, all of which will come on stream in the middle of next year.

The statement said Kingspan view of 2008 is unchanged from March in it expects an "appreciable year on year reduction in earnings.

At 8.35am Kingspan shares were 0.67 per cent lower on €7.40 on the Dublin market.