Kingspan shares rose by 8 per cent yesterday as first-half results came in slightly ahead of expectations despite the negative impact of its US flooring operation, Tate.
To the stock market's great relief, the company issued no fresh profit warning but stuck with its guidance for the full-year.
Kingspan said it looked forward to a satisfactory outcome for the year and "provided that there is no further deterioration in construction markets, remains confident that it has the products and the strategy to deliver further growth."
The Cavan-based building materials group reported a 25 per cent drop in pre-tax profits to €28.7 million in the first six months, as Tate posted an operating loss of €2.8 million. But if the impact of the US business is stripped out, pre-tax profits would have been 5.5 per cent ahead.
Acquired for $120 million in early 2001, Tate has proved a huge disappointment for Kingspan, as major contracts failed to materialise. The deal is currently the subject of an arbitration process with hearings due in January next year.
However, Tate now seems set to lose less than the €7 million previously expected by the company for this year.
Kingspan shares closed at €2.05, up 15 cents on the day as analysts left their full-year forecasts unchanged.
The shares have recently fallen to four-year lows. But chairman and chief executive Mr Eugene Murtagh said the company, which remains committed to its stock market listing, had plans to buy back up to 5 per cent of the shares. "We will do it gently," he said.
Kingspan, which reported a 16 per cent drop in adjusted earnings per share to 15.5 cents, announced a 20 per cent increase in its interim dividend to 2.1 cents.
Turnover was down by nearly 18 per cent at €360.5 million, but if Tate is again excluded, it fell by 4 per cent to €335.6 million.
Kingspan's insulated panels business accounted for some 30 per cent of turnover, although sales fell by 3 per cent to €116 million.
However, the company said it had been helped in the British market by new regulations on the insulation of buildings, although the full benefits of these would not be felt until the end of the year.
It expects this business to grow by 12 to 15 per cent in Britain next year as six recently-launched products pay off and the impact of the new regulations comes through.
Kingspan's raised access flooring business, which includes Tate, was hit by the downturn in the office construction sector in the US, Britain and the Republic, where activity was down 20 per cent on last year.
Overall, flooring sales were down by 47 per cent to €84.3 million. In the US, they fell by an even steeper 73 per cent as traditional target markets - computer rooms, financial services companies, data centres and telecoms buildings - were hit by the economic downturn.
Kingspan said it had identified other sectors to which access floors had not traditionally been supplied and significant growth was taking place in these areas.
There was better news from its other two businesses, with sales of insulation boards up by 17 per cent to €54.7 million.
Kingspan also announced the acquisition of Marec, a Dutch insulation board manufacturing business with sales of €10 million last year, for €4.6 million in June.
The company's environmental containers business posted a slight rise in sales, to €56.8 million from €56 million, a year earlier. Capital expenditure in the period amounted to €14.3 million.
