Kingspan expects €830m full-year profit despite sales slowdown

Sales at Irish insulation giant Kingspan hit €6.25 billion in the nine months to the end of September despite a global slowdown in orders in the third quarter amid soaring input price inflation.

In a trading update on Monday, the Kingscourt, Co Cavan-based company said it expects to deliver after-tax profits of €830 million this year, “significantly ahead of the €755 million recorded in 2021″.

However, Kingspan warned that there is a “lack of visibility beyond the next short period of months”, with sentiment remaining cautious against the inflation backdrop globally.

The company said it believes the “sharp increases we have seen in raw materials prices” over the past year and a half “have peaked, at least for now” and that “key inputs are likely to reduce in price in the fourth quarter”.

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In the nine months to the end of September, Kingspan said sales, inclusive of acquisitions and currency movements, were up 33 per cent on the same period in 2021 and 17 per cent in the third quarter of the year.

Sales of insulated panels increased 29 per cent over the nine months and 13 per cent in the third quarter. Underlying sales, excluding the impact of currency movements, increased 23 per cent in the year and seven per cent in the quarter, with global sales volumes “expectedly sluggish” in the third quarter.

Kingspan said this reflected “the slowdown in order placement flagged mid-year”.

“Undoubtedly, a factor has been expectations around raw material pricing, with some pick-up in order placement post the summer period,” the company said. “We have been carrying higher levels of inventory than normal for much of the year and, as certain inputs have seen deflation more recently, this has had a short-term impact on margins as these materials sell through.”

Activity in the Americas, the UK and Germany has held up “reasonably well” but was “softer” in the rest of Europe.

Underlying sales of insulation material, meanwhile, were up 12 per cent in the year to date and 8 per cent in the third quarter, Kingspan said.

“The sales growth experienced in the third quarter was price-led, reflecting input inflation, with rigid board volumes soft overall with decreased residential activity a factor,” the company said.

Kingspan said net debt at the end of the trading year is expected to be “in the region of €1.5 billion”, which reflects “a 2022 development spend in excess of €1.2 billion”, which includes €1 billion in acquisitions.