Kingspan posts record H1 profits on strong demand

 

Insulation and building materials manufacturer Kingspan has reported record first half profits, but said that cost inflation will persist until 2022.

Kingspan said its trading profits for the six months to the end of June jumped by 65% to €328.9m from €200.1m the same time last year on the back of high levels of demand and a global recovery in the construction sector.

Revenues for the six months rose by 41% to €2.920 billion from €2.072 billion in 2020, while basic earnings per share were up almost 66% to 132.4 cent from 79.8 cent the same time last year.

Shares in the Co Cavan-based company ended 2.47% higher in Dublin trade last week as it declared an interim dividend of 19.9 cent.

Kingspan said that the first half of 2021 has proven to be an extraordinary period for the company during which it experienced unprecedented demand, coupled with increasingly acute supply constraints and an inflationary curve never experienced before.

"The latter has meant that over the course of the year, price management activity will have had to recover well in excess of €600m in cost increases. Whilst a lag has been and can be expected, the recovery effort has so far been a success," the firm added.

Gene Murtagh, chief executive of Kingspan, said that growth in the first half of the year has been "remarkably strong" with revenue and trading profit at record levels driven by high levels of demand and a global recovery in the construction sector.

"Despite inflation in our input costs, effective price management has helped increase trading margins, with a stand out performance in our largest division - insulated panels," Mr Murtagh said.

The CEO said that Kingspan's strategy of expanding through acquisition and diversifying geographically has continued, with ten acquisitions made during the period across four continents, and a robust balance sheet positioned to support future growth.

"We also continue to invest in organic expansion, product innovation, digitalisation, enhanced compliance and executing on our ambitious Planet Passionate sustainability targets," he said.

"A strong pipeline of future demand means we are positive about the outlook for the second half of the year," Gene Murtagh said.

"Longer term, the decarbonisation agenda and increasing awareness of the need to reduce the contribution of the built environment to climate change is supportive of our focus on delivering customers with high performance solutions that deliver best-in-class thermal performance," he added.

Activity in Kingspan's largest segment - Insulated Panels - continued the momentum demonstrated last year during the first half of 2021 with deliveries reaching a record 40 million m².

Kingspan said that revenues in the division rose by 44% to €1.923 billion from €1.332 billion in 2020, while trading profits soared by 88% to €223.6m from €123.3m.

The company said that construction activity is clearly ahead in most markets and is being further enhanced by the tangible increase in the penetration of insulated panels in a number of key markets.

It said this dynamic has been particularly evident in the US, Brazil, France and the Benelux where the category is growing encouragingly in each case.

"Germany has also been strong, and significant growth in order intake has also been registered in Britain. Ireland has experienced a remarkably strong first half," the company added.

Revenues in Kingspan's Insulation Boards business rose by 36% to €499.5m from €367.9m while trading profits were up 44% to €69.9m from €48.5m the same time last year.

The company said that newbuild has recovered strongly in many regions and RMI activity is becoming a more meaningful portion of its insulation offering.