Kingspan has implemented "appropriate strategies" to deal with a changing business environment, according to chairman and chief executive Mr Gene Murtagh, who reported a better-than-expected 21 per cent rise in first half pre-tax profits to €38 million (£29.9 million).
But full year earnings forecasts have been scaled back on concerns about sales at the Tate operation in the US this year, and into 2002. Analyst Mr James Forbes at the group's broker, Goodbody, cut his pre-goodwill earnings per share forecast by 8 per cent to 36.4 cents for 2001 and by 10 per cent to 41.4 cents for 2002. Mr Forbes pointed out that the figures would involve e.p.s. growth of 13 per cent per annum over the next three years, adding that the group was well-positioned for the medium term.
Merrion analyst John Mattimoe has cut his earnings forecasts by 5 per cent to 36.4 cents for 2001, and by 41.5 cents for 2002 while at Davy, Mr Florence O'Donoghue was forecasting 36.1 cents and 40.6 cents. First half earnings per share rose 10.4 per cent to 15.9 cents and shareholders are to get a 29.6 per cent rise in their interim dividend to 1.75 cents per share.
Group turnover was up 34.9 per cent to €438.3 million for the six months to end June, boosted by the Tate acquisition in January which added €89.4 million. Excluding Tate, turnover was up 7.4 per cent, boosted by good demand for raised floors in Britain and mainland Europe.
Sales at Tate are expected to be well down in the current half, as cancelled orders mean office market dealers are holding surplus stock. Some analysts expect current half sales as low as €21 million. The results show the Tate gross operating margin of 20.23 per cent is well below the group's 30.3 per cent level. "Actions are under way to bring this margin closer to the UK benchmark level over time," the group said.
Mr Murtagh said the building materials group strategy involved product innovation, market development and investment to reduce unit costs and increase efficiency.
More than €5 million will be spent on new product development this year Mr Murtagh said this would double the group's available market within its existing geographic regions.
