Robust Kingspan battles through tough first half

19th Aug 2013 14:26

Despite pressure on its profit margins from weak European construction markets, Irish building products group Kingspan battled to deliver solid earnings growth in the first half of the year.After recovering from a sluggish first quarter the Dublin-headquartered company, which is dual-listed in London, hoisted revenues 13% to €858.4m, but if acquisitions and currency are excluded sales would have fallen 3.0%.Insulated panels, the largest of its four main businesses, drove up sales by 33% and profits by 21%, with the access floors segment lifting revenues but seeing profits dip. Insulation boards and environmental products saw sales and profits slip down.Chief Executive Gene Murtagh said this represented a positive performance against a backdrop of weak European economic conditions and a tough winter across many regions. He added: "Our strategy of positioning the company at the hub of conversion to lower energy buildings continues to enable us to build the business globally notwithstanding the external conditions."Kingspan said trading margins drop from 7.0% to 6.5% partially due to the dilutive effect of the acquisition of ThyssenKrupp Construction in the second half of 2012. The second quarter saw a strong recovery driven largely by the continuing conversion and penetration growth of "high performance" buildings, especially in the UK, North America and the Middle East, with more stable performances in Germany, France, much of Central Europe and Australasia. Acquisitions Rigidal Industries in the UAE and ThyssenKrupp Construction in Europe have performed well, contributing €138m turnover, and Germany-based ThyssenKrupp enjoying improved profitability thanks to Irish cost cutting. Earnings before interest, tax, depreciation and amortisation were up 6.0% to €75.9m, and basic earnings per share 4.0% to 23.0 euro cents.The interim dividend was hiked 10% to 5.5 cents per share.Looking forward, the board said that although the mood in the sectors seems to have improved internationally, broader economic activity was unlikely to provide much of a springboard for Kingspan's growth in the near term. This aside, management believe the company's geographic push and new products, combined with a robust order book and pipeline, should deliver an improved year-on-year result in the second half.Shares in Kingspan were up 4.3% to €11.48 at 14:32 on Monday. OH