Kingspan shares surge after 32.5% profits hike

KINGSPAN’S share price surged ahead by almost 6% yesterday after the company disclosed first half pre-tax profits increased by 32.5% to €37.5 million, well ahead of expectations.

The shares rose from an opening price of €5.15 to close at €5.45, a 5.83% increase as stockbroking analysts reacted well to the company’s figures, which also disclosed the interim dividend would be increased by 31% to 3.4 cent per share.

Goodbody analyst Robert Eason who rates the shares a buy said the main reason for the variance was stronger than expected sales growth across all product categories. “The key feature of the results is the structural growth stories of composite panels, insulation and environmental containers coming to the fore, with sales increasing by 23%, 27% and 14% respectively. The performance of the raised access floors business was well ahead of forecasts, with sales up over 50% (in local currency terms) in the US, while the decline in its European operations was not as bad as had been predicted,” he said.

Davy analyst Flor O’Donoghue said the results exceed its forecast and noted that net debt at the end of the first half of 2004 fell marginally, despite capital investment of €28.6m.

He said net debt was €116.2m and gearing a comfortable 40%, with 15 times interest cover.

Kingspan chairman and chief executive Eugene Murtagh said he was very please with progress to date, especially in the revitalisation of the company’s raised floor business in the US.

He believes there is plenty of scope for expansion in eastern Europe and the company will use its Polish manufacturing facility and new sales offices in the region to drive sales further in regions where Kingspan is already the market leader.

Mr Murtagh confirmed he will revisit his stance of his dual role as chairman and chief executive of Kingspan later in the year. The Irish Association of Investment Managers has been putting pressure on dual office holders to relinquish one role.

Earlier this year, Independent News and Media chief executive Tony O’Reilly stepped down as Kingspan chairman.