Kingspan gears up for more strong growth

Kingspan, the Cavan-based builders products group, is geared up for further strong growth following the 24 per cent rise in pre-tax profit to £37.8 million (€48.0 million) in 1998.

The first quarter has started well and the second quarter is looking good, said chairman, Mr Gene Murtagh. The group's main Cavan plant will be operating at full capacity - 24 hours per day, for seven days a week - after Easter, he added. The group, he said, should grow profits by more than 20 per cent this year.

Kingspan is continuing to seek further acquisitions. While nothing is imminent, the group has the capacity to spend £50 million (€63.5 million) to £70 million (€88.9 million), he said.

Noting that the Irish economy is expected to grow by a further 7 per cent in 1999, he said "this should be coupled with real growth in construction output in the sectors of interest to Kingspan". In contrast, the British economy is forecast to grow by just 1 per cent. However, the group stressed the commercial and industrial construction sector will fare better than other segments.

Kingspan noted that these sectors "are making a gallant effort to rise above the gloom that pervaded the UK in the last quarter of 1998 and confidence is creeping back in recent weeks".

Since the acquisition of Hewetson, the group is more involved in the commercial property sector and noted that commercial building output should grow by 12 per cent this year. It also detected optimism in the industrial building side particularly in relation to order book levels for the first half.

Kingspan said it should make "significant progress in Central Europe". Growth "is likely to be less pronounced in other mainland European markets".

The latest results show a 22 per cent increase in sales to £290.4 million (€368.8 million). Earnings per share grew by 21 per cent to 17.2p (21.9 cents). Earlier this month it announced a second interim dividend which brought the total dividend to 1.71 cents, representing a 21 per cent rise. It remains in a strong position with a gearing of 40 per cent, up from 37 per cent and interest is covered a comfortable 15.6 times.

Some of the profit growth came from acquisitions and currency translation. However, if these are stripped out, the grow in operating profit still comes out at a respectable 14.0 per cent.

A geographic breakdown of sales shows a 46 per cent increase to £51 million (€64.8 million) in the Republic. The largest area, Britain and Northern Ireland, showed a more modest growth of 7.7 per cent to £182 million (€232 million). Sales in mainland Europe doubled to £47 million (€60 million).