Kingspan hopeful of quick reopening of construction sites

Building insulation group Kingspan is hopeful of construction activity in Ireland and the UK recommencing, on a significant level, in the near future after seeing sales decimated last month.
Kingspan hopeful of quick reopening of construction sites

Building insulation group Kingspan is hopeful of construction activity in Ireland and the UK recommencing, on a significant level, in the near future after seeing sales decimated last month.

The Cavan-headquartered company said it saw a near 35% year-on-year slump in global sales in April due to the Covid-19-prompted closure of various construction markets around the world.

While some markets – particularly the Americas and Germany – have remained strong, Kingspan saw real weakness in many others; with the UK, France and Ireland severely hit.

Its UK activity, in April, was less than half what it was in the same month last year and Ireland was its worst market with an 80% year-on-year slump. The company said Ireland was “a clear standout” in terms of poor performance.

April is traditionally a strong profit generating month for Kingspan, but the company said it expects to break-even, at best, for the month this year. It expects current trading conditions to persist over the coming weeks “at the very least”.

It is hoped that some of the 148,000 people employed in construction in Ireland can begin returning to work early this month, with building sites beginning to reopen.

In the UK, where Kingspan generates around 25% of its annual revenues, many housebuilders are looking to reopen building sites in the coming weeks, while some have already begun phased openings.

On top of that, builders’ product providers like Grafton and Travis Perkins are set to start reopening distribution lines to construction firms.

“Kingspan is hopeful that construction activity can recommence shortly,” a company spokesperson said.

“We are keen to see construction get up and running again in Ireland, but obviously that has to be done in a manner that protects workers and is consistent with Government efforts to contain Covid-19,” they said.

“The CIF [Construction Industry Federation] has developed a very useful set of ‘return to work’ guidelines which we think provide a sensible and safe approach to how construction might operate as restrictions are lifted.

"The UK is probably a little further ahead of Ireland in terms of moving to reopen the construction sector, but again that needs to be done in the context of a broader public health strategy.”

In a trading update, ahead of its AGM, Kingspan said it generated group sales of €1.03bn in the first quarter of the year.

That result was not overly impacted by the Covid-19 outbreak, but was still down 3% on the same period last year.

Davy expects Kingspan to post trading profit of between €350m and €400m this year.

That would be well below Davy’s previous €525m forecast and down on Kingspan’s 2019 profit of just over €497m.

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