Strong start for building group

Building materials group Kingspan has made a strong start to 2013, despite seeing persistent weakness in many of its markets.

The company also hinted at some slight recovery becoming evident in Ireland.

The Cavan-headquartered insulation services specialist yesterday reported a 10% year-on-year increase in group sales to €520m for the first four months of 2013, despite tough European construction markets.

The boost in sales was mainly evident in March and April, after a particularly slow first two months.

On a regional basis, market conditions have remained weak in the UK, particularly in parts of the commercial construction sector, although some improvement was noted in office and residential activity.

Mainland Europe has been mixed, with the Benelux countries weak but progress evident in Germany.

Ireland, the company added, is showing “some signs of improvement” in the area of commercial construction, although the firm noted any growth is coming from “a negligible base”.

In terms of divisional performance, revenue in Kingspan’s access flooring and insulation board units fell by 9% and 5% respectively during the period.

The insulated panels division, however, grew sales by 31% year-on-year, mainly boosted by last year’s ThyssenKrupp and Rigidal acquisitions in Germany and the Middle East. Revenue, in this area was down by 5% year-on-year when those contributions are stripped out, however.

The underperforming environmental sales division saw a 22% annualised drop in revenue, mainly due to the loss of a major contract.

Chief executive Gene Murtagh said the business has at least €200m at its disposal but is likely to continue reducing debt rather than make more acquisitions. He said that the company is on course to lower its debt levels to half of EBITDA by the end of this year.

While the company said activity levels have picked up since the slow start to 2013, the current environment “leaves it difficult to predict market conditions much beyond mid-year”.

However, it said a combination of growing business order levels, a more diversified geographical spread and improving acquisition benefits (the Rigidal subsidiary recently signed a multimillion-euro airport roofing deal in the Emirates) “should position the group well for the second half”.

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