Kingspan signals 'modest' dividend after 60pc profit fall
Published 02/03/2010 | 05:00
Kingspan chief executive Gene Murtagh said yesterday that he sees no reason why the company could not pay a "modest" interim dividend later this year if the group's current performance is maintained.
However, as the company yesterday revealed a 60pc fall in operating profit to €62.7m for 2009 on the back of a 33pc decline in turnover to €1.12bn, Mr Murtagh told the Irish Independent that it would be the second quarter of the current year before management could get a "firm grip" of what's going on in the market.
"The litmus test will be quarter two," he said. Bad weather across Europe this winter has hampered clients' projects, but in the UK, orders of insulated panels are up 20pc year-on-year in the first two months of 2010.
Mr Murtagh said the group had a total of €380m in cash and debt facilities available to it, with a potential €150m that could be allocated to acquisitions. He said a number of possible targets had been examined and that two medium-sized opportunities are likely to materialise soon.
Kingspan shares soared as much as 14pc in trading yesterday as investors digested a set of results that were better than consensus expectations. The stock had fallen as much as 15pc last week.
Diluted adjusted earnings per share (EPS) were 28.3 cent in 2009, a 64pc fall on 2008, but the figure was still 3pc better than forecast by Davy Stockbrokers.
The adjusted EPS figure of 31.7 cent was nearly 8pc better than the 29.5 cent expected by Goodbody Stockbrokers. Kingspan's debt levels also continued to decline sharply.
It had net debt of €164.3m at the end of 2009 compared to €299.6m a year earlier.
The company said no dividend would be paid in respect of 2009.
Mr Murtagh said that there has been "tangible evidence" of continuing stability within its markets. Kingspan generates most of its revenue from the sale of insulated panels used in office and home construction, while 45pc of all its revenue is derived from the UK, where customers include retailers such as Tesco, Aldi and Lidl.
Kingspan's performance in Poland and Germany was described as "relatively strong", while the US remains weak.
Sales of insulated panels, used primarily in offices and other commercial developments, which account for 53pc of sales, fell 31pc last year to €594m.
Sales of insulated boards, which are mainly used in homes, dropped 38pc to €215.3m. Access flooring sales were down 26pc to €147.6m, and this segment will record further declines this year, Mr Murtagh confirmed.
He also described the Irish market as "tragic", with construction of offices and homes having retreated to levels not seen for 30 years.
The company's results added: "The stranglehold caused by a lack of general business lending will compound this trend for some time".
Mr Murtagh added that talks with unions and staff regarding the implementation of a controversial 'survival plan' at its Cavan factory are continuing.
Kingspan's shares closed up 11pc, or 55 cent, at €5.55.