Kingspan reports 5% dip in sales but is confident of full year profit 

Net debt at the end of September 2020 was €312 million, but the group said its end markets are in reasonable shape 

Kingspan CEO Gene Murtagh pictured outside the IKON Innovation Centre, Kingscourt, Co. Cavan. 

Insulation group Kingspan recorded a 5% fall in sales in first nine months of 2020 and a net debt of €312.0m, but its end markets are in reasonable shape ”bearing in mind the uncertain and evolving backdrop," the group said. 

The Cavan-based group reported sales in the nine month period up to September fell by €3.27bn, down 5% on the same period in the prior year. However, there were tentative signs of recovery in the third quarter, with sales growth of 1%.

In a trading update today, the group reported a decline of 6% in sales of insulated panels in the first nine months of the year, down 3% in the third quarter. Underlying sales (pre currency and acquisitions) were down 10 per cent year to date and down 7% in the third quarter.

However, sales and order intake activity in “a number of key markets” such as France and Germany were positive during the third quarter, the group said. The UK has been “softer” and Canada has been “weak,” but the US has been solid overall while Latin America has seen “decent momentum.” 

Insulation Board sales in the first nine months were down 14% and down 5% in the third quarter. The group said volumes improved through the third quarter with raw material related price deflation in the earlier part of the period partially offsetting this. Sales in the UK, Ireland and much of Continental Europe performed well through the third quarter. The Asia Pacific region consolidated the progress seen in the first half whilst the Middle East has been a more challenging environment. Activity in the US was positive through the third quarter.

Light and air sales in the first nine months were up 30% and up 46% in the third quarter. Underlying sales were down 9% year to date and down 8% in the third quarter. For data and flooring, sales in the first nine months were up 6% and up 7% in the third quarter. Underlying sales were behind by 5% in the first nine months and were ahead by 3% in the third quarter. 

Water and Energy sales in the first nine months decreased by 5% and increased by 4% in the third quarter with "waste water and rain water harvesting solutions notable positives."

Net debt at the end of September 2020 was €312 million but the group said it expects to deliver a full year trading profit marginally ahead of 2019.

Davy analyst Flor O’Donoghue said the earnings guidance issued by Kingspan for this year, would indicate that second-half profits will be up over 10% on H2 2019. 

"This would represent an excellent outcome in challenging circumstances with margin strength a likely stand-out," she said.