Supermarket expansions boost Kingspan's panel sales by 8pc
Construction activity by supermarket chains such as Aldi and Lidl in Ireland prompted an increase in sales at Kingspan's insulated panels unit here, marking a rare sales boost in the building materials sector.
Speaking to the Irish Independent as the company posted strong interim results, Kingspan chief executive Gene Murtagh said that the food and multiple retail sectors had prompted an 8pc growth in volume panel sales in Ireland and 20pc higher value sales in the first half of the year -- but from a low base.
Ireland accounts for a very small part of Kingspan's overall business.
Group sales at the Cavan-based insulation maker jumped 32pc to €736m in the first half of the year, with an "untypically robust" start to 2011 helping it post a 24pc rise in trading profit to €44.2m for the period.
Underlying sales at the company for the first six months were 16pc higher when its recent acquisition of CRH's European insulation business was stripped out from the figures, while trading profit was up 17pc on the same basis.
The results were better than anticipated by analysts, but a cautious outlook tempered most expectations for the full-year period, as the company said there was "limited evidence to date" of sustained economic recovery in its main markets.
Mr Murtagh also said he had previously been pencilling in an increase in group input costs including steel and chemicals of between €80m and €100m for 2011. However, he now believes that total increase will be in the order of €50m.
He pointed out that while the reduced forecast was welcome in one way for the group, it conversely signals lower demand for the raw materials in the marketplace, hinting at weaker levels of wider economic activity.
Sales at Kingspan's insulated panels division, which mostly comprises materials used in commercial projects such as supermarkets, were up 22pc in the first half to €350.4m.
While that was primarily as a result of volume growth, eight percentage points of the figure was due to pricing and product mix changes. About 43pc of Kingspan's panel sales are made in the UK, where Mr Murtagh said there had been significant activity in the refurbishment of existing buildings.
He said such business is likely to rise to between 30pc and 40pc of Kingspan's UK panel business over the next few years. Sales were also solid in mainland Europe, where Germany, Belgium and the Netherlands performed well. In the US, panel sales rose 7pc by volume and 15pc in value.
In its insulation boards unit, sales were up 86pc to €222.6m, with 72 percentage points of that accounted for by the acquisition of CRH's insulation business. Trading profit climbed 36pc to €14.5m. The products are mainly used in construction projects such as residential schemes.
Shares in Kingspan closed up 4.2pc at €6.12.