Kingspan's profits jump but market recovery 'glacial'
Kingspan, the Cavan-based insulation maker, has reported its highest trading margin since 2008 as the impact of self-help measures combined with strong performances in the UK, US and Australia helped to hike profits.
Releasing first-half results, Kingspan said that revenue for the period rose 4pc to €889.3m, while trading profit was 24pc higher at €69.2m.
Its trading margin hit 7.8pc - up 1.2 percentage points on the first six months of 2013.
Speaking to the Irish Independent, Kingspan chief executive Gene Murtagh said that there are a "few dark clouds" for the business in some mainland European countries, but added that Kingspan's quotation and order books are still about 5pc ahead of where they were at the mid-point last year.
Kingspan generates about 38pc of its sales in the UK, where demand for its insulation panels has been driven by the retail and manufacturing sectors.
Insulated panels - used mostly in commercial construction - accounted for €526.1m of group sales in the first six months of the year, while trading profit at the division jumped 30pc to €43.7m. The trading margin at the unit rose to 8.3pc from 6.9pc.
In mainland Europe, the performance of insulated panels sales was mixed.
Mr Murtagh said events in Ukraine have continued to weigh on demand.
"There's no question that the events in Ukraine are affecting Germany," he said, with the pace of economic recovery in all Kingspan's markets having been described by the group as "glacial at best".
Sales of insulation boards - used mainly in the residential market - were 1pc higher at €221.1m in the period, with trading profit hitting €17.7m compared to €13.4m in the first six months of 2013.
The UK also proved a strong performer in the segment, with new house construction helping to buoy business. Kingspan said growth in the division within the UK had abated somewhat in recent months.
Mr Murtagh said the improvement in trading margins in Kingpsan's two big business segments had been helped by measures taken by the group since the downturn started.
"We've done an awful lot of operational streamlining it's partly a benefit of that," he said. "But we've also weeded out some underperforming businesses."
In Ireland, Mr Murtagh said there had been an improvement in Kingpsan's order book but noted that the recovery in the residential market remains largely Dublin-focused and is happening off a very low base.