Shares in insulation giant Kingspan decline after trading update

Irish group expects trading profit of about €877m this year

Shares in Irish insulation giant Kingspan slipped more than 2.5pc by lunchtime on Tuesday as it said it expects its trading profit for 2024 to be largely unchanged from last year.

The company said that its sales in the nine months to the end of September edged 3pc higher to €6.35bn, and were 6pc higher in the third quarter.

It added that before currency fluctuations and acquisitions, sales were down 4pc in the year to date, however, and in line with the third quarter of 2023.

Kingspan makes insulated material that is used across housing and commercial construction projects and is a bellwether for the health of broader construction markets across Europe and other markets. It also provides solutions such as access flooring and ventilation.

With a market capitalisation of just over €14bn, it generated sales last year of €8.1bn and a record trading profit of €877m.

Kingspan, whose CEO is Gene Murtagh, said it expects to deliver a trading profit this year in line with that 2023 figure. That’s below the €900m that was expected and partially due to timing issues. It said its pipeline remains strong.

Kingspan said sales of its insulated panels rose 1pc in the third quarter compared with the previous three months, but were 2pc lower in the first nine months of the year. It added that third quarter sales rose across all its global markets.

“Activity in the Americas remains in line overall against a strong comparative, France is holding up well and Germany is showing growth more recently versus a soft third quarter in 2023,” according to the group.

“Eastern Europe is challenging overall while the Middle East saw strong activity in quarter three,” it added. “Australasia and India have seen further momentum in recent months.”

Kingspan said that its insulation sales jumped 18pc in the first nine months of the year, and by 20pc in the third quarter.

However, the performance was boosted by its acquisition of a 51pc stake in German firm Steico early this year. Steico makes wood-fibre insulation and wood-based building envelope products.

Before currency fluctuations and acquisitions, Kingspan’s insulation sales were down 10pc in both the year to date and the third quarter.

“It is difficult to look too far ahead when there are so many moving parts both economically and geopolitically,” noted the group. “Whilst end markets have their obvious challenges the global backlog of orders is ahead year on year.”

“In some markets we are seeing subdued near-term dispatches despite strong backlogs which should augur well for the early part of 2025, albeit at the expense of 2024,” it told investors.

“Whilst there is still some way to go in the current year, with the seasonally important fourth quarter remaining, we expect to deliver a full year trading profit broadly in line with the record level achieved in 2023,” it added.

Davy Stockbrokers noted: “By its extremely high standards, 2024 is shaping up to be a solid but somewhat subdued financial year for Kingspan, but also one in which there has been an investment in multiple strategic initiatives that carry significant longer-term repercussions.”

Reporting on:independent.ie