Kingspan sales down 34% due to recession

SALES AT insulation and building materials specialist Kingspan were down 34 per cent to €350 million in the first four months of the year, the company said yesterday.

The Cavan-based group told shareholders at its annual general meeting in Dublin yesterday that trading has been “predictably tough” in the opening months of the year.

“Overall, sales have declined by 34 per cent (27 per cent on constant currency) to €350 million compared to the same period last year, and by 39 per cent (33 per cent on constant currency) excluding acquisitions,” the company said in a statement.

It added that a number of factors helped to offset the decline in new building, the market where it generates most of its sales.

These included an increase in the number of people refurbishing their houses, increased thermal standards, which require more insulation and energy-saving technology in buildings, and measures to cut costs and working capital needs throughout the organisation.

The company said that sales were weakest in Britain and Ireland, where house building has suffered most. They have been more robust in western Europe, but are still down on the same period last year. The early weeks in central and eastern Europe were markedly down on last year, but the group expects them to be more stable in coming months.

Sales in North America were well up, due to the contribution from Metecno, the insulated panels business it bought last September for €75 million. The company is the second biggest player in its business in the US.

Excluding this, Kingspan said that sales in the region were down and are expected to fall further. It added that Metecno performed well in the closing months of 2008, but fell between January and April this year.

The group pointed out that it anticipated this when it bought the company last year.

Kingspan has been cutting costs since the middle of 2007. This has resulted in annual savings of €50 million this year.

“Working capital has been reduced in line with internal targets and further reductions will be achieved on both fronts through the remainder of the year to ensure balance sheet stability is maintained,” its statement said.

It added that it is seeing varying levels of short- to medium-term activity across its businesses, and there is a general sense that the pace of deterioration has eased in recent months.

“While the economic environment is widely forecasted to continue stabilising, the group is likely to experience further contraction in the near term, although at a reduced rate to that experienced to date,” its statement predicted.

While it expects some improvement coming into the summer months, the company does not believe that the typical mid-year pick up in business will be as marked as previously.

“Medium-term, Kingspan remains exceptionally well-positioned, both in product and geography, to deal with the opportunities and challenges which it is likely to encounter.”