As expected, the impact of US losses hit Kingspan's half yearly results as the construction and building materials group today reported a 24.5% fall in pre-tax profits to €28.7 million. Turnover for the six months to the end of June was down 17.8% to €360.5 million from the same time last year.
Kingspan said that its adjusted earnings per share dropped 15.7% to 15.5 cent while an interim dividend of 2.1 cent was declared, up 20% on the year.
Excluding the impact of its Tate US operation, Kingspan said its pre-tax profits were up 5.5% to €36.6 million on turnover which was down 3.8% to €335.6 million.
The Co Cavan-based Kingspan said that the fall-off in turnover was due to a drop in Ireland of €9.7 million and a UK drop of €5.6 million. This offset an increase in other markets of €1.9 million.
'This small reduction in turnover relative to a much larger decline in the related market places reflects the successful launch of new products and the continuing conversion of markets to Kingspan products,' the company said in today's results statement.
Kingspan said the sales of insulated panels in all its markets were down 3.2% on the same time last year. While the overall cladding market in the UK was down 7.2%, the company achieved sales growth of 6.9% in this market. In Ireland, the same market was down 15%.
The company's raised access flooring products are aimed at the high rise office market and Kingspan said they are exposed to the economic influences in the group's primary market places of Ireland, the UK and the US. The Irish and UK new office construction sector, which has seen major growth over the past three years, is down 20% on last year. Kingpan says the continuing slowdown will put sales and margins under pressure in this sector.
Sales for Kingspan's access floors in the US were €22.8 million in the six months to the end of June, compared with €83.3 million for the same time last year due to the downturn in IT and financial industries - their main market.
But the company said it has developed and commenced major marketing initiatives to increase conversion of the commercial office market to raised access floors and says that despite expectations that the office construction market for 2003 will fall another 30%, the initiatives undertaken point to a return to growth in the market.
Kingspan said that sales of its environmental containers were up slightly in the six month period, while sales of insulation boards were up 17.1%. The company said that a 'buoyant' new house construction market has driven this growth, coupled with the effect of new housing regulations on insulation. Marec, a Dutch insulation board manufacturing company, was acquired in June at a cost of €4.6 million.
Looking ahead, the group was cautious. 'The business environment can be expected to remain uncertain to year-end and into next year. Appropriate strategies have been developed to manage this situation. The key strategies going forward involve a deepening of the product, technology and sales pipelines, continuing investment in reducing unit costs of production and tight management and control of fixed costs.'
'Taking all the circumstances into account, Kingspan looks forward to a satisfactory outcome for the year, and, provided that there is no further deterioration in construction markets, remains confident that it has the products and the strategy to deliver further growth,' it added.
Shares in Kingspan had jumped over 5% to €2 in early afternoon trade in Dublin - a gain of 10 cent.
