Kingspan profits down 13% but figures exceed forecasts

Kingscourt-based insulation and building materials manufacturer Kingspan has said its trading profit for the six months to the end of June was down 13% on the same period last year. Despite the decline, the figures have exceeded forecasts amid the challenges presented by Coronavirus.

But the firm's shares rose over 5% in Dublin trade after the company benefited from demand after the Covid-19 lockdowns.

Kingspan's first half revenue, at €2.07 billion, were 8% lower; while its trading profit amounted to just over €200m.

The outcome was ahead of analyst expectations with Davy forecasting a 43% decline in trading profit.

Kingspan said it will not be paying an interim dividend to shareholders. It had scrapped plans in March to pay a dividend for 2019 in response to the Covid-19 crisis.

Gene Murtagh, Chief Executive of Kingspan, said challenges remain but the company is well placed for the future.

“Kingspan has delivered a resilient first half result in a period of unparalleled challenges. Performance has varied substantially from region to region depending on the severity and length of Government restrictions, and been helped by our rapid introduction of cost containment measures.

"With over €1bn in cash and undrawn facilities we are well placed to come through the crisis in a strong position. In 2020 we have completed or agreed terms on three major acquisitions of businesses with revenue totalling over €400m, and we also continue our organic expansion, with new facilities being developed in locations including Brazil, Russia, and Sweden."

In relation to the dividend, Mr Murtagh said: "We have decided it is prudent not to pay an interim dividend and our shareholder returns policy is under review. We expect that the economic environment will remain weak, with confidence for businesses to make investment decisions curtailed. On a more positive note, policy makers are more focussed on ensuring buildings are more energy efficient, which is a supportive long-term trend.”

In today's results statement, Kingspan said the first half of 2020 has been an experience different to any that it had encountered in the past.

From the middle of March, revenue had suffered and was down over 30% at the extreme in April.

Trading in May was also challenging but Kingspan said its order intake began to improve and June trading turned out particularly strong helped by pent-up demand.

Kingspan noted that the global picture varied hugely as governments and societies responded differently to the crisis.

"In Europe, France shut down abruptly at the end of March but recovered well through late May and June. Germany and much of Central Europe continued largely uninterrupted," the company noted.

But it added that Spain, the UK and Ireland imposed the most severe and long-lasting restrictions in relative terms with the resulting curtailment in demand still prevailing.

It said that US activity performed well throughout, although order intake has eased back notably in recent weeks. Canada also experienced "a brutal decrease" in revenue and Brazil performed relatively well.

Kingspan also said that activity suffered significantly in the Middle East, while in India the business was effectively closed for a couple of months, and current trading remains slow. Australasia has been generally resilient throughout.

Revenue at Kingspan's Insulated Panels business fell by 8% to €1.332 billion, while trading profits were down 16% to €123.3m.

Trading profits at Kingspan's Insulation Boards division fell by 20% to €48.5m, while revenues were 18% lower at €367.9m with the pattern of sales at the business following a similar path to that of the Insulated Panels business.

Revenue at its Light and Air division rose by 20% to €171.9m, while trading profits were up 23% to €7.6m.

In its Water & Energy division, Kingspan reported a 10% fall in revenue to €92.9m due to lockdown measures in Ireland and the UK. However trading profits rose by 17% to €6.9m on the back of cost containment.

Revenues in the company's Data & Flooring division increased by 6% to €108m, while trading profits were up 21% to €13.8m with positive performances in the key regions of the US, Western Europe and Australia, although the UK was weaker.