Eastern Europe aids profit surge at Kingspan

Growth in central and Eastern Europe helped drive up profits by 30 per cent at insulation and building systems specialist, Kingspan, during the first half of the year.

The Cavan-based company yesterday reported that pre-tax profits in the first six months of 2007 were up 29.7 per cent at €108.2 million from €83.4 million during the same period last year.

Earnings per share jumped 30.4 per cent to 52.7 cent from 40.4 cent in 2006. The board is proposing to pay an interim dividend of 8 cent a share, a 30 per cent increase on last year's payout of 6 cent a unit.

Sales grew 34.4 per cent to €908.4 million in the period, from €675.9 million during last year's first half.

Earnings before interest, tax and write-offs increased at a similar rate, to €136.2 million from €108.1 million in 2006.

Chief executive Gene Murtagh said yesterday that much of the growth came from the central and Eastern European markets, as well as the US and UK.

In a statement, the company said central and Eastern Europe "continues on a strong trajectory and Kingspan's business in the region is up by 82 per cent".

It added that this reflected the group's purchase last year of a 51 per cent stake in Turkish insulated panels manufacturer, Izopoli. Excluding this, it said the underlying growth rate during the period was 40 per cent, which reflected an unseasonably strong start to the year.

"Indications are very positive overall and capacity is being doubled in the Czech Republic where a new plant is expected to be commissioned in the third quarter of 2008," the statement added.

Overall, sales on mainland Europe were up 45 per cent at €163 million from €112 million.

Mr Murtagh said that most of Kingspan's recent acquisitions are developing businesses and for the moment will be low earners. As a result, they did not have a major impact on this period's results.

In the Irish market, which accounts for 16 per cent of the group's business, sales were up 15 per cent overall at €145 million.

Mr Murtagh added that much of the growth came from commercial, retail and office building. He predicted that residential construction, which is coming down from a record peak last year, is likely to take nine months to settle down.

"There's a lot of stock out there, but once that's sold, things will resume, and the business will still be historically and comparably strong," he said.

Kingspan has set aside €250 million to invest in growing its existing businesses. It is also well positioned to continue buying rivals. "We have all the scope we need to make acquisitions," Mr Murtagh said.