Monday 19 March 2018

Russian fears dampen outlook in Europe as Kingspan rides US and UK markets recovery

Situation in Ukraine is weighing on minds in Central Europe, says Gene Murtagh
Situation in Ukraine is weighing on minds in Central Europe, says Gene Murtagh
Gene Murtagh of Kingspan
Donal O'Donovan

Donal O'Donovan

The crisis in Ukraine is dampening investment across Central and Eastern Europe, according to the head of Kingspan Group.

Shares in the Cavan-based insulation maker rose yesterday after it reported better than expected results for 2014.

The company's main business is supplying the construction sector, including insulation panels used in commercial building and insulation boards used in house building.

Conditions in the core UK and US markets continue to improve but the picture across the rest of Europe is more mixed, according to chief executive Gene Murtagh.

Civil war between the Ukrainian government and Russian-backed separatists is darkening the investment outlook in neighbouring states.

"In Central Europe there is a palpable concern around Russia," Mr Murtagh said.

Looser ECB policies may help a European recovery, he added.

UK and US markets are recovering having fallen sharply after the global crisis, he said.

UK house building is well below the peak with some way to go before output catches up to the country's needs, Mr Murtagh said.

Recoveries in the US and UK helped trading profits jump by 21pc to €148.5m last year, 3pc more than expected by analysts. Revenue rose 6pc to €1.89bn.

Kingspan said it had a strong final quarter in all its markets. The company will pay a final dividend per share of 10 cents, bringing total dividends for the year to 16.25 cents.

Davy analyst Flor Donoghue said a trading margin of 7.9pc was 30bps higher than anticipated.

In Ireland, which accounts for just 4pc of group revenues, recovery in construction remains gradual. Kingspan products help boost long term energy efficiency, but Mr Murtagh said last year's fall in energy costs will not dampen demand. "We see (recent declines) as cyclical or even politically driven," he noted.

Demand for energy efficient buildings is now driven through building codes, rather than by customer demand.

Long term fears over energy dependence on Arabia and Russia means that will not change, he said.

Kingspan shares closed up 4pc yesterday at €17.11 each.

Irish Independent

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