PROFITS AT insulation and building materials specialist Kingspan increased for the first time since 2007 in the opening six months of the year, according to figures published yesterday.
The Cavan-based group said that operating profits grew 9.2 per cent in the first half of the year to €33.1 million from €30.2 million during the same period in 2009.
The group pointed out that it was the first time it had experienced operating profit growth in three years.
Chief executive Gene Murtagh said yesterday that on the basis of the company’s order book it expected its performance in the second half of the year to be solid.
Mr Murtagh said growth in its order book, combined with a substantial reduction in debt, left the company with the resources to pay an interim dividend to shareholders, which it did not do last year. The directors are proposing to pay four cent a share.
Kingspan did warn that it faces a number of challenges in the second half of the year, mainly on raw material prices, which have implications for its margins. Steel prices are particularly volatile, while the cost of some chemicals is also rising.
Revenues for the six-month period rose by just over 1 per cent to €558.7 million from €552.5 million in 2009.
Pretax profits grew 2 per cent to €25.5 million in the first half of this year from €25 million during the same period in 2009. Earnings per share were 12.5 cent, an increase of 1.6 per cent on the 12.3 cent earned by the group during the first half of last year.
Kingspan cut the level of its borrowings further during the first half. Net debt at the end of June was €135.1 million, down almost €100 million on the €230.8 million that it owed its lenders 12 months earlier, and almost €30 million less than the €164.3 million liability it had at end of last year.
Mr Murtagh said the reduction was largely due to better cash generation and tighter management of the cash in the business.
The group has the scope to spend up to €250 million on acquisitions, according to Mr Murtagh,
He said yesterday that it has been in talks with the owners of a number of possible acquisitions, but has not completed a deal as it cannot get the value for which it has been looking.
“There’s just not been a meeting of minds between buyer and seller,” he said, adding that talks are continuing with various parties.
Kingspan’s markets include Ireland, Europe, North America and Australia, while its products span insulation, access floors (used in offices and commercial buildings) and environmental and renewable energy-related products, which are mainly geared for new houses.
The Irish market weakened again during the first half. In Europe, British sales were up 4 per cent, driven largely by the retail sector.
Sales grew strongly in Germany and the Czech Republic, boosting its central and eastern Europe and Middle East division by 6 per cent overall.
In North America, overall turnover increased 4 per cent, but a more competitive market meant that prices have been under pressure.
Kingspan said that this was especially evident in Canada, but added that a new manufacturing plant in Toronto would boost its competitiveness in this region.
