Insulation market warming up, says Kingspan

12th May 2011 18:54

Insulation board specialist Kingspan is expecting the second quarter to see a continuation of the "delicate economic recovery"Trading in the first four months of 2011 was well ahead of the corresponding period of last year, with group sales up 33% year on year at €439.3m, though this performance is flattered by the inclusion this time round of the recently acquired European insulation businesses of CRH.After stripping out the acquired businesses, sales were still 20% ahead of last year, with two percentage points of this accounted for by favourable exchange rate movements. The group's percentage operating margin overall was in line with the same period in 2010, reflecting the impact of raw material price increases. Net debt at the end of April was approximately €248.0m, an increase of €119.6m on the position at the end of 2010 due principally to the acquisition in the period. Interest cover remains in excess of 10 times.The group said that the UK is seeing a gradual improvement in residential construction, an increase in refurbishment activity and good volumes in non-office related building activity. Mainland European markets are showing tentative signs of recovery with activity in Germany being particularly buoyant although order patterns in Eastern Europe remain somewhat erratic, the group said. Kingspan's North American businesses recorded a good performance overall in a flat construction market driven in the main by penetration growth in Insulated Panels and good data centre volumes in Access Floors offsetting the impact of a weaker office market. Australia recorded good sales growth in the period and Ireland, which represents 4% of group sales, was flat overall year on year.Looking ahead, the near term expectation is for further raw material pricing pressure for the remainder of quarter two. For the second half, steel costs are likely to flatten, however, continued inflation on chemicals seems probable at this point, the group reckons."The momentum we have seen to date, together with the group's solid order books, is likely to deliver an operating outcome for the first half of 2011 favourable to that of a year earlier," the company said.---jh