Kingspan sees ‘sluggish’ start

By Geoff Percival

Kingspan shares rose by as much as 4% despite the company noting a “sluggish” first quarter.

The Cavan-headquartered specialist building materials group said, in a trading update ahead of its AGM in Dublin yesterday, that the prolonged severe winter weather in many of its markets, coupled with a previously-flagged slowdown in demand in the UK stunted growth since the turn of the year.

Overall, Kingspan generated revenues of €895m for the first three months of the year, up 8% on the same period last year.

Trading in the UK — now only 25% of total group revenues compared to 75% a decade ago — was “tough”, although sales of Kingspan’s core insulated panel products there have shown improvement in recent weeks, management said.

Overall, the insulated panels division grew sales by 4% in the first quarter.

In February — when presenting Kingspan’s 2017 annual results, which included an 18% jump in revenues and 11% rise in trading profit —CEO Gene Murtagh said that given the group’s healthy order book, trading was expected to pick-up from the slow start as the year progresses. He suggested overall trading in the first half should be “steady” despite the uneasy start.

Kingspan added to that sentiment yesterday, saying that “notwithstanding the present trading environment, the group remains well-positioned for the year as a whole and for the longer-term, given the breadth of our product mix, our extended geography, and the ongoing advancement of our high-performance technology.”

On a geographical basis, the group said North America has picked up in recent weeks following a “somewhat lacklustre” beginning to the year, while mainland Europe has been “positive” and Ireland has seen a good start to the year, “reflecting growth in the residential sector”.

Acquisitions bumped Kingspan’s net debt, as of the end of March, up by €234m to €698m. The group’s shares closed up 2.4% yesterday, having previously been ahead by 4%.

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