PROFITS AT insulation specialist Kingspan hit almost €42 million in the first six months of this year, an increase of 26 per cent on 2010, its latest figures show.
Kingspan said yesterday revenues were €736 million in the first half of 2011, an increase of 32 per cent on the same period last year, when sales were €558.7 million.
First-half operating profits were €41.7 million, an increase of 26 per cent on the first six months of 2010, when the group’s operations generated a surplus of €33.1 million. Basic earnings per share were up 38 per cent at 17.3 cent.
Excluding the impact of Kingspan’s purchase earlier this year of a fellow Irish company, CRH’s European insulation business, sales were up 16 per cent and trading profit was up 17 per cent at €44.2 million.
Chief executive Gene Murtagh said yesterday that this collection of businesses contributed €2.5 million to the bottom line in the first half of the year and is expected to add a similar figure during the final six months of 2011.
Kingspan is working on absorbing the acquisition into its own group. Mr Murtagh said he expects that it will contribute about €12 million to operating profits next year.
Mr Murtagh said he expected the momentum behind the underlying business to continue into the second half of the year, but added that it should loosen a bit.
He also said the group could see little connection with what has been happening on global stock markets and the performance of its own businesses, which are in Europe, the US and Australia.
“What we have tended to rely on ourselves is our own projects pipeline, and what that’s saying is that we will be slightly ahead of the broader market.”
Mr Murtagh said the company was taking a prudent view of its near-term prospects.
He said from the perspective of the overall industry, the “big disappointment” was the lack of a recovery, but he said that, at the same time, the market is stable.
Market analysts were also prudent about Kingspan’s prospects for the rest of the year, while saying it had outperformed their expectations in the first half.
Bloxham left its forecast of €80 million operating profit for this year unchanged. Flor O’Donoghue of Davy said the firm originally expected Kingspan’s earnings before interest and tax to reach €75 million this year.
He said there were now grounds for believing that the group could push this to €80 million, but that “clearly the rate of growth will slow in the second half”.
Robert Eason at Goodbody said the firm was leaving its key forecasts for the group unchanged, and said there is a possibility that higher interest charges would slow earnings growth.
Kingspan’s net debt was €216 million at the end of June, compared with €135 million a year earlier. This largely reflected borrowings related to the CRH purchase, which cost it €120 million.
It recently raised $200 million from US institutions through a bond sale. Mr Murtagh said yesterday that it has €400 million in long-term borrowings, repayable at between 4.25 per cent and 5.25 per cent. It also has a credit facility of €330 million with an agreed interest rate of 1.1 per cent above the wholesale Libor rate.
