Bullish Kingspan eyes Brazil and Russia

KINGSPAN has identified the emerging economies of Brazil and Russia as medium-term expansion targets.

Speaking on the back of a strong set of interim results, the Cavan-based building materials group’s chief executive, Gene Murtagh, said short-to-medium-term expansion would be focused on existing key markets like western Europe and North America which both saw good sales growth — by volume and value — in the first six months of 2011.

The company yesterday reported a 32% year-on-year jump in first-half group sales, boosted by acquisitions and good earlytrading momentum.

First-half revenues went from €558.7 million to under €736m. That increase was partly boosted by the acquisition of CIE, the former insulation business of CRH, but also by more favourable weather conditions — when compared to the same period last year. Excluding the CRH deal, like-for-like sales were up 16%.

First half pre-tax profits were up by just under €10m at €36.2m; operating profits went from just over €33m to €42m and earnings per share rose by nearly 5c, or 38%, to 17.3c. An interim dividend of 4.5c was declared, a 12.5% increase on last year’s pay-out to shareholders.

Each of the group’s divisions increased revenues, except its access floors business. On a geographical basis, Kingspan saw mostly double-digit percentage growth in both sales volume and value across each of its territories. This included a 20% year-on-year jump in sales value in Ireland (volumes were up by 8%); a result hailed as “fantastic” by Mr Murtagh. Though not its core territory any longer, performance in Ireland (which still accounts for around 5% of Kingspan’s group revenue) came against historic lows for construction here. Management said its developing operations in Australia and New Zealand are progressing well.

Mr Murtagh yesterday reiterated what he said at Kingspan’s AGM, earlier this year, that no further largescale acquisitions will be made this year, but early 2012 could see more activity. The CRH Insulation deal has now all but been consolidated into the rest of the business, with most of its unwanted parts disposed of, but Kingspan still has a war-chest of around €400m for future purchases. This is on top of the $200m it recently raised from a private placing, which will largely be used to further pay down debt. The group’s net debt crept up to €216.5m (from €135.1m a year ago) in the first half, largely on the back of that CRH acquisition.

While Kingspan said its first half benefited from “an untypically robust start to the year” and that momentum eased during the second quarter; it still gave an upbeat outlook for the full year.

Second-half performance may be down on the first half, but should still be up on a year-on-year basis — management adding that the business is well-positioned for the future.