Kingspan set to build on profits

PROFITS at building materials group Kingspan are expected to be well ahead this year after the group recorded a strong first half.

In a trading update to shareholders yesterday, the Cavan-based firm said it had traded “well ahead of the first six months of 2004” so far this year and profit margins had shown an improvement.

“Revenue growth has continued to be strong during the first half of the current year, notwithstanding a slower than expected start to the year in central and eastern Europe,” the company said in a statement.

Sales in eastern Europe account for less than 10% of the group total.

Its recent acquisitions, including the timber frame housing business Century Homes, which it bought for close to €100 million, and a panel manufacturer in Britain, are also trading in line with expectations.

“Looking ahead Kingspan anticipates continued progress in its main product groups, with building activity consistent with that experienced to date. Raw material prices are also likely to be more stable than in the recent past. Results for the year to 31 December 2005 are expected to be ahead of current market expectations.”

Chief executive Gene Murtagh said the combination of good underlying growth coupled with the contribution from acquisitions provides a strong platform for continued good growth.

The positive trading update sent the company’s share higher yesterday, closing up 3.3% to €10.70 on the Dublin market. They have gained nearly 15% over the past month.

NCB Stockbrokers said yesterday that it was upgrading its full year earnings per share forecasts by 5% to 58.2 cents.

Davy Stockbrokers said it was preparing to upgrade its profits forecast for this year and that the news on raw materials was an unexpected bonus: “We believed that top-line growth was going to be a more significant influence this year.”

The broker said in a research note that they had already been lifted substantially this year: “We are excited by the Kingspan story and think there may be more to go in the stock.”

Kingspan also released revised 2004 profit figures yesterday after taking into account new international financial reporting standards.

Under IFRS, operating profits in 2004 would have been €102.2 million and not the reported €103.3m and pre-tax profits would have come in at €96.4m and not €88m.