Revenues rise by 19% at Kingspan amid UK slowdown

Shares in insulation specialist Kingspan tumbled on Monday after the company confirmed evidence of a UK slowdown and indicated that full-year profits would be lower than market expectations.

Kingspan said that revenues rose by 19 per cent in the nine months to September 30th, as it pointed to an “encouraging” pipeline.

The Dublin-listed company said that sales avanced to €2.7 billion, up by 19 per cent on the same nine-month period in 2016, while in the third quarter, sales rose by 17 per cent.

Kingspan’s shares fell sharply in the wake of the news, ending the day at €32.26, which knocked €406 million or 7.22 per cent off the company’s value.

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Early on Monday afternoon they hit a low of €31.80, more than 8.5 per cent below their opening quote, before recovering ground later on.

Sources blamed several factors for the fall. The group’s statement confirmed some evidence of a slowdown in UK commercial and industrial building, although it described the company’s markets as “relatively stable”.

Stephen Hall, analyst at stockbroker Cantor Fitzgerald, pointed out that Kingspan predicted that it would make a profit of €375 million, which was 1.4 per cent below the €380 million expected by the market.

Net debt at the end of September 2016 was € 479.8 million, and is expected to be in the region of €400 million at year end.

“In general our end markets are relatively stable, notwithstanding some recent evidence of a slowdown in UK commercial and industrial activity,” the group said, adding that the group’s development pipeline is “encouraging”.

The group's insulated panel division saw a growth in sales of 16 per cent in the nine months of the year, and 13 per cent in the third quarter. Mainland European sales were "solid" in most markets and notably positive in France, but in the UK, Kingpsan said it has noticed a "sense of near-term indecision around order placement". North America sales were "solid overall".

Sales advanced by 10 per cent in the nine months in the grou’s insulation board sales, and by 16 per cent in Q3, reflecting “ strong price growth necessitated by raw material inflation”.

Sales in the light and air division rose by 4 per cent in the nine months, and by 7 per cent in the third quarter, while environmental sales advanced by 12 per cent 11 per cent, respectively.

"A particular highlight was the ongoing growth in rainwater harvesting in Australia, " Kingspan said.

Sales in access floors rose by 2 per cent and by 4 per cent in the third quarter, amid softening UK office activity.

Looking ahead, Kingpsan said that it expects to deliver full year trading profit growth of approximately 10 per cent or about €375 million, provided that current exchange rates prevail.