Kingspan doing well in Europe

Despite the huge downturn in the building sector, the performance of Kingspan in central Europe and particularly in Holland, Germany and Belgium held up "pretty strongly", according to Kingspan chief executive, Gene Murtagh. He added that the weaker larger markets are the UK and US. He was speaking after the group reported a fall in profits but said the company was optimistic for the future. Mr. Murtagh said on Tuesday that he sees no reason why the company could not pay a "modest" interim dividend later this year if the group's current performance is maintained. He said that the most of the streamlining of their operaions had been carried out. "You come to a point where you ease back on cost reductions and start to get the business back into constructive growth mode. That is the type of crossroads we are at right now." When asked if there were still any implications for jobs in Ireland, he explained that there is still something further to go. "That all depends on how negotiations continue," he said. The company this week revealed a 60% fall in operating profits to €62.7m for 2009 on the back of a 33% decline in turnover to €1.12bn. Mr. Murtagh said that it would be the second quarter of the current year before management could get a "firm grip" of what's going on in the market. Bad weather across Europe this winter has hampered clients' projects, but in the UK, orders of insulated panels are up 20% in the first two months of 2010. Mr. Murtagh said the group had a total of €380m in cash and debt facilities available to it, with a potential €150m that could be allocated to acquisitions. He said a number of possible targets had been examined and that two medium-sized opportunities are likely to materialise soon. Kingspan shares soared as much as 14% in trading early this week as investors digested a set of results that were better than consensus expectations. The stock had fallen as much as 15% last week. Diluted adjusted earnings per share (EPS) were 28.3 cent in 2009, a 64% fall on 2008, but the figure was still three per cent better than forecast by Davy Stockbrokers. The adjusted EPS figure of 31.7 cent was nearly eight per cent better than the 29.5 cent expected by Goodbody Stockbrokers. Kingspan's debt levels also continued to decline sharply. It had net debt of €164.3m at the end of 2009, compared to €299.6m a year earlier. The company said no dividend would be paid in respect of 2009. Mr. Murtagh said that there has been "tangible evidence" of continuing stability within its markets. Kingspan generates most of its revenue from the sale of insulated panels used in office and home construction, while 45% of all its revenue is derived from the UK where customers include retailers such as Tesco, Aldi and Lidl. Sales of insulated panels, used primarily in offices and other commercial developments, which account for 53% of sales, fell 31% last year to €594m. Sales of insulated boards, which are mainly used in homes, dropped 38% to €215.3m. Access flooring sales were down 26% to €147.6m, and this segment will record further declines this year, Mr. Murtagh confirmed. He also described the Irish market as "tragic", with construction of offices and homes having retreated to levels not seen for 30 years. The company's results added: "The stranglehold caused by a lack of general business lending will compound this trend for some time." Mr. Murtagh added that talks with unions regarding the implementation of a controversial survival plan at its Kingscourt factory are continuing.