Kingspan eyes acquisitions as trading profit grows to €230m

Both trading profit and revenue at Irish building materials group Kingspan reached "record levels" in the first half of 2019, the company's interim results show.

The company, which specialises in insulation manufacturing, said in the report published on Friday that it achieved revenue of €2.2 billion and profit of €230 million. That represented growth of 12 per cent and 18 per cent respectively.

Profit after tax at the company for the six-month period ended June 30th, 2019, was €173.2 million compared with €146.7 million in the same period last year. This was driven in the main by the growth in trading profit.

Total investment in the period was €74.5 million predominantly comprising expenditure around capacity expansion.

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Trading was generally positive across most of continental Europe, with the exception of Germany which was a little weaker.

The UK performed “robustly” although the report noted that weakness can be expected in the near-term. Activity in the Americas was “encouraging once again”.

The company also issued an update in relation to its “net zero energy mission” which aims to achieve 50 per cent by 2016 and 100 per cent by 2020.

It said it was on schedule to achieve its 2020 goal. “Climate Change evidence is now undeniable and at Kingspan we are intensifying our efforts to play our part in delivering against the sustainable development goals,” it said.

Kingspan chief executive Gene Murtagh said it was a strong performance from the company.

“We have delivered a record first half with revenue growth in all our business units and a strong trading profit performance,” he said.

"We continue to expand our global production footprint with new facilities under construction in the US, Brazil and Sweden.

“The near-term outlook is solid although the political uncertainty in the UK, weakness in sterling, and weaker German economy are amongst risks we are monitoring closely.

“Alongside today’s results, we are also announcing a series of sustainability targets under our Planet Passionate Programme, which builds on the net zero energy journey we started in 2011.

“Seismic transformations are required to address the growing issue of climate change, and we are committed to delivering on the challenging targets we have set ourselves.”

The Kingspan board proposed an interim dividend of 13 cent per ordinary share, an increase of 8 per cent on the 2018 interim dividend of 12 cent per share. The interim dividend will be paid on October 4th.

In terms of outlook, orders on hand are “presently at decent levels” and intake patterns through the early part of the second half of the year “have been broadly solid”.

However, it said it was “mindful of a number of factors” including Brexit. “In the UK, the environment remains highly uncertain and this is likely to persist for some time,” it said.

“In Europe, the trading environment in Germany is tough with no near term sign of that changing.

“Furthermore, the second half of the year has a steeper comparative overall exacerbated by the impact of a weaker sterling exchange rate on translation.

“That said, our business is in good shape and the quality of our proposition, the diversity of our end markets and a world that is ever embracing energy efficient methods of construction positions Kingspan well for the years ahead.”