Kingspan reports 4% rise in revenues
‘Glacial’ recovery slows growth at insulation manufacturer after strong Q1 but operating profits jump by 28%
Gene Murtagh, CEO Kingspan, said that the group delivered strong growth in profitability in the first six months of the year, and its order book has carried good momentum into the second half of the year, “driven by continued growth in the demand for low energy buildings”. Photograph: Alan Betson / The Irish Times
Insulation manufacturer Kingspan reported a 4 per cent rise in revenues in the first six months of the year, as sales levelled off in the second quarter following a “strong and unseasonal” quarter one. Sales in the group’s Irish divison dipped during the period, as the group forecast little improvement in global growth going forward.
Revenues advanced to € 889.3m in the six months ending June 30th 2014, with strong growth in the manufacturer’s insulated panels division, while operating profit was up 24 per cent to € 69.2m. Pre-tax profits grew were up by 27.5 per cent to €60m and the group reported a trading margin of 7.8 per cent, an increase of 120bps versus the same period in 2013. Net debt fell to € 113.4m, down from €165.1m in the first half of 2013, and the company grew its interim dividend per share up 14 per cent to 6.25 cent.
Gene Murtagh, chief executive, Kingspan said: “Kingspan has delivered strong growth in profitability, notwithstanding a tougher EU construction sector in the second quarter, and a global economic recovery that remains weak. Our order book carried good momentum into the second half of the year, driven by continued growth in the demand for low energy buildings.”
In Ireland, revenues fell back to €35.1m from €36m in 2013. Kingspan said that activity in insulated panels continues to improve, with both sales volume and order intake growing “substantially” over 2013. With regards to insulation boards, the company said that pricing remains under “significant” pressure in Ireland.
Globally, insulated panels grew by 9 per cent, with trading profit up 30 per cent, “reflecting continuing penetration gains, a positive business mix, and some improvement in end markets in certain regions”.
Insulation boards sales were up 1 per cent and trading profit up 32 per cent, with a good performance in the UK in particular and an improved business mix. The group’s new facility in the Eastern region of Germany was fully commissioned in the second quarter.
Environmental sales were flat overall and have stabilised, the company said, but sales in its access floor division were down 11 per cent, with weak US office activity offsetting a good performance in UK office volumes.
Looking ahead, Kingspan said that the pace of economic recovery “ has been glacial at best” and it anticipates that trend to remain through the second half of the year. However, order intake at its larger businesses, most notably in the UK, North America, and Australia has been strong in the first half, “which bodes well for the latter part of 2014 in those markets”.
In a note Davy Stockbrokers said that it was a positive update from Kingspan and highlights that the group is “well positioned for H2 and beyond”.
“We are likely to nudge up full year forecasts,” the broker said.