Kingspan reports 15% increase in operating profit to €104m

Building supplies company Kingspan has reported an operating profit of €104.6 million for the year to the December-end, an increase of 15 per cent from €90.9 million the previous year.

Revenue for the year rose 5 per cent to €1.63 billion, while basic earnings per share increased by 18 per cent to 43.8 cent. Last year was the third consecutive year of growth, according to the insulation specialist.

Trading profit was up 13 per cent to €107.7 million despite a slowdown in activity in the second half of 2012 due to weak construction markets in the euro zone. This figure was slightly better than consensus expectations of €106 million.

Net debt, meanwhile, declined to €165.5 million from €170.1 million at the end of 2011.

Kingspan reported a strong performance in Germany and central Europe, but a decline in activity in construction markets in the Benelux and the Netherlands.

While activity in the UK building and renovation sector was subdued, new residential building and retail/distribution projects were provided some respite, according to Kingspan.

“Ireland is no longer a huge influence. The UK market accounts for between 37 and 38 per cent of our business, and that was a very tough market last year,” said Kingspan chief executive Gene Murtagh.

The group has increased its focus outside the Republic since the recession hit in 2007.

Ireland currently represents 4 per cent of Kingspan’s total sales, eclipsed by sales in Australiasia for the first time last year.

Last year the Cavan-based company acquired ThyssenKrupp Construction Group, the insulation business of German steel giant ThyssenKrupp, and Dubai-based Rigidal Industries for a combined consideration of €61.6 million.

The company said the two acquisitions boosted global presence, though the benefit to earnings would not show until this year.

The first-half of 2013 is expected to be tough, reflecting sluggish markets in the UK and western Europe and emerging weakness in Australia, according to Goodbody Stockbrokers.

However, this is being largely offset by relative robustness in Germany, and pockets of growth in the Gulf region.

“By growing margins in what are weak underlying construction markets, these results highlight why over the long-term we view Kingspan as one of the most attractive stocks in the building materials sector.”