Insulation products provider Kingspan forecasts nearly 70% annual profit growth

Specialist building materials provider Kingspan has delivered a significantly better-than-expected full-year forecast, suggesting its 2015 profits should increase by nearly 70%, despite global economic confidence wavering.

The Co Cavan-based insulation products provider yesterday reported a 44% year-on-year rise in sales for the first nine months of 2015, to €2bn.

The third quarter was particularly strong, with a 54% annualised sales rise noted, which was boosted by the contribution of recent acquisitions.

This has been a busy year, acquisition-wise, for Kingspan and big purchases have boosted its net debt to almost €414m, more than €300m up on the same period last year.

However, management expects debt to end the year at around €380m.

Yesterday’s big line from Kingspan, however, was the forecast of around €250m in trading profit for 2015.

Kingspan trading statement, expects full year profit of €250m +68% year on year https://t.co/xELymZhlZf

— Ian Guider (@ianguider) November 9, 2015

This result would be a 68% improvement on last year and 8% ahead of analyst expectations, many of whom yesterday said they would be upgrading their own forecasts as a result.

It also coincided with new economic forecasts. The OECD marginally lowered its global growth outlook while the Confederation of British Industry slightly rowed back on its UK growth expectations.

Both, however, see the UK, Kingspan’s main market, growing by 2.4% this year and managing to remain “robust” and “steady”.

Britain, mainland Europe, and the Americas are Kingspan’s three main regional markets and sales of its core product area, insulated panels, soared by 54% in the first nine months of this year.

This performance was boosted by a “solid” showing in the UK, “steady” sales in Europe, and strong growth in North America, particularly in the US.

Insulated panels should show 53% revenue growth this year, to €1.7bn.

“The UK continues to perform solidly, albeit with some moderation since September,” management said.

“The update provides further proof that Kingspan is in exceptional shape at present, albeit the current year result will be flattered, to some extent, by some one-off items; for example, not having the loss-making winter months for [recent purchases] Joris Ide and Vicwest,” said Flor O’Donoghue of Davy Stockbrokers.