Kingspan profits soar 30% on sales

Ian Guider

In a trading update, the company said the sales, which have been particularly strong in the second half of last year, continued their upward momentum for the rest of 2004 and would be 18% ahead of 2003 sales.

The company said profit margins will be about 10.7% of sales this year, up from 10.1% in 2003. Kingspan said sales of wall panels, insulation and other structural products grew by more than 20% in 2004. It added: “Environmental container sales are expected to be up over 10% versus 2003. Sales of access floors in the US have grown very strongly in 2004, while the rate of decline in Europe has slowed somewhat in the second half.”

The statement said it would also get a boost from a number of acquisition made during the year, including the E15 million takeover of Belgian panelling firm Apco.

Kingspan said it does not expect new accounting rules to have much impact on its results this year. It also expects its debts to fall to about E110 million, a E11m reduction for the year. Looking ahead to 2005, it says the overall construction market is “reasonably favourable”.

Kingspan added: “The benefits of both capital investment and bolt-on acquisitions during 2004 should impact positively on efficiency and volumes in the current financial year.

“Taking into account an element of price inflation, as well as 2004 acquisitions, the company expects 2005 sales growth to be at a similar rate to that achieved in 2004.”

Last week, the company settled a long-running dispute with the former owners of the US flooring business, Tate, which it acquired in early 2001. The company did not meet its target and Kingspan wanted the price of the deal reduced.

The row was finally solved last week with the Irish company receiving E27 million in cash. This money will be used to pay down its debts. The company has also raised E350 million from a syndicate of banks, which will be used for further acquisitions and to develop the existing business over the next five years.

Brokers reacted favourably to the results. Davy Stockbrokers said: “Kingspan is in the foothills of what we think could be a number of years of strong organic-driven earnings growth.”

NCB Stockbrokers and Goodbody Stockbroker said they would raise their earnings estimates for Kingspan following the trading update.

The shares gained 5.79% yesterday to 7.67, valuing the company at E1.2 billion.