Kingspan doubles profits to £5.09m

 

STRONG growth has been recorded by Kingspan, the Cavan based building materials group. It has doubled pre tax profit, from £2.56 million to £5.09 million, in the six months to the end of June 1996. Further growth is anticipated for the remainder of the year.

The latest results have no contribution from Kooltherm Holdings, a Welsh based manufacturer of insulation products, acquired last month. However, there should be a contribution to profits in the second half.

The level of activity experienced in the first half has continued into the third quarter. S&D Group, acquired last February, is trading very strongly and target profits have been exceeded.

The group's capital expenditure phase is almost complete. Two new plants have been commissioned which should boost growth in the second half and thereafter.

About 50 per cent of the profit growth in the first half came from acquisitions, said Mr Eugene Murtagh, chairman and chief executive. This implies organic growth of almost 50 per cent, indicating a very strong underlying performance.

Growth came from all geographic areas, said Mr Murtagh.

The Irish market was "every very strong", according to Mr Murtagh who noted the amount of inward investment and the confidence in the economy. The Netherlands and Belgium had similar growth but Germany was sluggish.

The British market continued to be flat. However, by gaining market share, Kingspan managed to generate profit growth in that market.

Sales grew from £39.5 million to £52.75 million in the first half. Profit margins expanded from 6.5 per cent to 9.6 per cent. This is attributed to a changed sales mix following the acquisition of S&D Group and the benefits which flowed from reduced raw material prices.

Mr Murtagh said the price of the group's main chemical purchases would seem to have stabilised following the volatile period in 1995.

The rationalisation of the production facilities in the insulation division in Britain is almost complete and the Heysham plant was closed as planned. Operational benefits from the capital investment in Pembridge were now "beginning to come on stream", the chairman noted.

Earnings per share jumped by 87 per cent from 7.90p to 14.80p. A small part of that increase, 1.3p, was due to the changed status of Thermal Products Development, the royalty company which was purchased from four directors.

Previously, the royalties were expensed as paid but the royalty assets have now been capitalised and are being depreciated. Shareholders are to receive a higher payout with a rise in the interim dividend from 1.40p to 1.70p.

The group's gearing has increased from nil to 61 per cent (including the deferred amounts outstanding in respect of acquisitions). However, the chairman noted that the interest cover was a comfortable 15 times.