Kingspan expects 2011 profits to rise by up to 25%

PROFITS AT Kingspan could be up to 25 per higher in 2011, the insulation and building materials specialist said yesterday, but it warned that conditions in 2012 remained hard to predict.

The Cavan-based company, which manufactures and sells insulation and energy-saving materials for buildings, said in a statement yesterday that sales for the nine months to the end of September were up 30 per cent at €1.14 billion.

About 14 per cent of the growth was attributable to acquisitions, with the balance of the expansion coming from its existing businesses.

The group said yesterday that, given its performance to date, combined with its order book, “we expect a full-year 2011 operating profit in the range of €82 million to €85 million”.

That return would be between 23 per cent and 25 per cent more than the €67.4 million operating profit that Kingspan reported for 2010.

However, the group warned that, at this stage, 2012 would be a good deal harder to call.

“Should the macro environment remain stable, albeit moribund, Kingspan’s product range and orientation towards energy-efficient building solutions should support further gradual progress,” the company said.

“The threat of markets retreating somewhat in 2012, however, remains a real possibility although visibility is more difficult in this environment.”

Kingspan said building activity in key markets such as the US and Britain was down 50 per cent on its 20-year average.

The group said this year’s sales increase was down to market penetration, geographic expansion and refurbishment activity rather than any growth in its key markets.

In recent months, building has eased in its main markets, and orders fell slightly during the third quarter of the year as conditions remained uncertain in many regions, particularly in the EU.

Its non-residential pipeline picked up, however, which the group said was a positive indicator for the medium term.

“UK activity levels have remained resilient overall, against an uncertain economic backdrop,” the company said.

“Western Europe has been solid overall and activity in Germany has remained strong, albeit with lower levels of growth than experienced earlier in the year.”

General economic weakness and overcapacity combined to make eastern Europe tougher than western Europe.

In the US, Kingspan said insulated panel sales were well ahead of last year, despite low construction activity.

The group attributed this to increased market penetration.

The company continued to enjoy sales growth in Australia.

“Activity in Ireland remains subdued at exceptionally low levels,” the group added.

Kingspan is likely to reduce net debt to €195 million by the end of the year from €216.5 million at the end of June.

Net debt fell slightly between June and the end of September to €215 million, as dividend and interest payments offset the cash flow from its operations

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