Kingspan on course to meet target

Building materials specialist Kingspan has said that it is on course to meet full-year targets — including a 10% rise in trading profit — despite seeing a slight drop in revenues in the third quarter.

The Cavan-headquartered group’s latest trading update, published yesterday, showed a 0.7% year-on-year decline in third-quarter revenues.

However, the firm, which specialises in low-energy and environmentally-friendly building solutions, added that revenue for the first nine months of 2012 amounted to €1.16bn; up by 1.6% on a year-on-year basis.

Back in August, Kingspan reported an annualised profit increase of 23% for the first half, but said it remained cautious in terms of full-year outlook. Yesterday, it said that it expects to deliver a full-year trading profit of around €105m; which would be up by 10% on a year-on-year basis, and in line with market expectations.

“While it is clearly difficult to fully counter persistent economic and construction weaknesses — which have the potential to become more pronounced in early 2013 — the structural and global dimensions to Kingspan’s business should go some way to offsetting this, as it has done in the past,” management said.

It added that a strong R&D pipeline, continued market share growth and the contribution from recent acquisitions should help in moving the group forward.

The nine months to the end of September saw good progress for most of Kingspan’s divisions, with year-on-year revenue growth of 3% evident in both insulation boards and insulated panels; and a 19% (albeit, aided by acquisition) rise in its access flooring unit. The environmental division, however, suffered a tough year, with sales falling by 18% in the first nine months and down by 27% in the third quarter.

On a geographical basis, sentiment has been “subdued” in most of Kingspan’s markets in recent months, with general building activity easing, but the group has recorded “solid progress”.

However, despite a lack of confidence in Europe, a slowdown in Australia and stagnation in the US commercial building sector; Kingspan has seen “pockets of relative buoyancy” in central and eastern Europe, most notably in Germany.

The group’s net debt position, as of the end of September, was €222.1m. This was up from €171.2m, as of the end of June, reflecting the purchases of the construction arm of German steel giant, ThyssenKrupp and the UAE-based roofing systems specialist, Rigidal Industries. That said, Kingspan expects net debt at the end of this year to have reduced to around €200m.