Kingspan expects operating profit to increase 10%

Building materials group Kingspan remains on target to report its fourth successive year of operating profit growth.

However, in its third-quarter trading update yesterday, it also pointed to weaker sentiment and an easing in building activity across a number of its markets.

The group said it expects to report a full-year operating profit of € 105 million, up 10 per cent on 2011.

In a cautious statement it said that while “persistent economic and construction weaknesses” have the potential to become more pronounced in early 2013, it expected the structural and global dimensions of Kingspan’s business “should go some way to offsetting this”.

“Growing market penetration, a strong RD pipeline, resilient refurbishment activity and driving the returns from recent acquisitions should all combine to move Kingspan forward,” the company said.

In the nine months to September 30th, revenues rose to €1.16 billion, up 1.6 per cent on the prior year.

While the pace of sales growth “moderated” through the third quarter, as sales fell by 0.7 per cent on third-quarter 2011, Kingspan’s overall trading margin increased by 0.4 per cent year-on-year, in line with the margin reported in the first half of the year.

Across insulated panels and insulation boards revenue increased by 3 per cent, while sales in access floors were up by 11 per cent, excluding its Australian acquisition earlier in the year.

However, sales in its environmental division plummeted by 18 per cent in the first nine months of the year.

Kingspan also noted that sentiment “undoubtedly weakened further” in the third quarter due to a “deepening lack of confidence in Europe” and the US commercial construction market being in “somewhat of a holding pattern”.

Despite “challenging headwinds”, broker Davy yesterday said the group was on track to meet full-year expectations and was making “very good progress” on its net debt.