Monday 23 September 2019

Kingspan shares slump on Brexit fear

Kingspan CEO Gene Murtagh
Kingspan CEO Gene Murtagh
John Mulligan

John Mulligan

Insulation maker Kingspan said its panels business in the UK has experienced a "sense of near-term indecision around order placement", as Brexit negotiations remain mired in a political morass.

The assessment prompted shares in the group to tumble close to 8pc at one stage yesterday.

Davy Stockbrokers also said that it was the first time since November 2014 that it had not upgraded its Kingspan profit forecasts after a trading update or results announcement.

But the Cavan-based group, whose CEO is Gene Murtagh, added its "future activity tracker" levels within its panels division in the UK remain "modestly ahead" of last year.

Kingspan's insulation panels are typically used in the construction of commercial buildings.

The most recent statistics have showed that UK construction output fell in the last quarter, with a 5pc contraction in commercial construction. Shares in UK housebuilders also slumped last week due to Brexit concerns.

Kingspan said its sales rose 19pc to €2.69bn in the first nine months of 2017, with the figure up 17pc during the third quarter.

Underlying sales, excluding acquisitions and currency fluctuations, were 11pc higher in the year to date, and up 13pc during the third quarter.

Revenue was boosted as Kingspan passed on input cost inflation to customers.

The company said it expects profits in the current financial year to be 10pc ahead of the €341m it generated in 2016. The 2016 figure was 33pc higher compared to 2015.

Kingspan added that sales of insulated panels rose 16pc in the first nine months of the year and by 13pc in the third quarter. Underlying sales were 12pc ahead in both periods. That was due largely to the company passing on input-related inflation. Mainland European sales were "solid" in most markets, notably France, according to the group.

In Latin America, where Kingspan expanded its presence in Brazil in September, the company said that it has experienced "very encouraging activity" since entering the market.

Kingspan bought a 51pc stake in Brazilian firm Isoeste in September, and bought an insulated panels business in Colombia in April. It has also built a facility in Mexico.

In its insulated boards unit, Kingspan said sales in the first nine months of the year were up 10pc and by 16pc in the third quarter. Underlying sales rose 13pc in the year to date, and by 19pc in the third quarter. That reflected price hikes due to raw material cost inflation.

Irish Independent

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