Brokers predict 17% jump in Kingspan earnings

KINGSPAN shares rose 3% yesterday after the Cavan-based building materials group issued an upbeat trading statement for the first half of the year.

The group said sales of its main products were ahead of expectations in all its target markets. Its products include insulation panels, floors, environmental containers and devices used in pollution control.

Construction markets in Britain and Ireland had been stronger than expected and contributed to most of the growth.

Britain and Ireland account for approximately three-quarters of Kingspan’s sales. The company also had positive news on its manufacturing capacity, which had been increased, and said its programme of “substantial capital investment across all product sectors” would pay dividends in the future.

Goodbody stockbrokers, which act as brokers to Kingspan, said the company’s capital spending in 2004 would be significantly ahead of last year.

Goodbody revised its earnings forecasts upwards following the statement and predicted that earnings for 2004 would be 17% higher than last year.

Analyst Robert Eason said Kingspan’s growth had benefited from better conditions in the raised access floor market, which had been in decline since 2001.

Mr Eason also said there was potential for an upturn in non-residential construction markets and upgraded the stock from “add” to “buy“. He set a price target of 6 for Kingspan shares, which closed yesterday at €4.98.

Kingspan announced pre-tax profits of €65.4 million last year, a 3% increase on 2002. It blamed a stronger euro for hurting profits and said adverse currency movements wiped €2m off the bottom line. It also wrote off 1.6m in restructuring charges, which further depressed profits.

The company made no further comment yesterday on the resignation of non-executive director Tom Mulcahy, the former AIB chief executive and Aer Lingus chairman, who stepped down when news of alleged tax evasion among former senior executives at AIB became public last month. Mr Mulcahy maintained at the time of his resignation that he was tax compliant.