Wednesday 13 December 2017

Kingspan sales up despite weaker sterling

Kingspan
Kingspan "traded positively" in the UK in both its insulated panels and boards sectors, but weak sterling has adversely affected the company's sales. Photo: PA
Michael Cogley

Michael Cogley

Brexit has yet to hinder trading at Irish insulation company Kingspan, as sales in the opening nine months of the year soared by 13pc to €2.27bn.

Kingspan "traded positively" in the UK in both its insulated panels and boards sectors, but weak sterling has adversely affected the company's sales. Before currency translations Kingspan's income had increased by 17pc but the major fall-off in currency has curtailed the surge in sales.

The company has targeted a full-year trading profit of €335m, up 30pc on 2015. Sales of insulated panels have risen by 17pc in the first nine months of the year and up 4pc in the third quarter.

Demand for insulated panels has been "very solid" in mainland Europe, with France and the Benelux performing well. Activity in North America has been sluggish, with Kingspan expecting the dip in sales in the US to continue for the rest of the year.

Elsewhere, the group's new "Light & Air" division is set to hit annualised sales at the end of 2016 of €190m after completing the acquisitions of Europe-based Essmann in September and US-based Bristolite in October.

Net debt at the end of September was €466m, up €52m on the same point last year. This was driven largely by a cumulative acquisition spend of €196m year on year.

"As anticipated, we are going through a period of mild raw material cost inflation and the related recovery effort is under way.

"The weakening of sterling against the euro, in particular since mid-year, is impacting the translation of the group's sterling denominated earnings," the company said in a statement.

Goodbody analyst Robert Eason said it was another "strong" period for the firm.

"Subsequent year's forecasts will also be upgraded by between 3pc and 4pc, resulting in trading profits of €352m in FY17 and €369m FY18. It is such momentum that highlights the quality of Kingspan versus peers," he said.

Davy analyst Flor O'Donoghue said Kingspan's share price was now "at its most attractive valuation in a number of years".

"The latest upgrade provides clear evidence of the group's ability to withstand what is a number of challenging headwinds. It also runs contrary to a share price that has drifted in recent times," he said.

Shares closed down slightly, at €22.805 each, after being up almost 4pc in early trading

Irish Independent

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