Building materials group Kingspan has repeated that it expects a drop in earnings this year, hit by slowing growth in Ireland and the UK.
In a trading update delivered at its AGM today, it said that economic conditions continued to tighten and that, predictably, trading in the first four months of 2008 has been more challenging than in recent times.
Kingspan said that sales revenue has been at similar levels to those achieved last year - at constant exchange rates. However, it said the effect of the exchange rate movements between the US dollar, sterling and the euro has resulted in a decline in sales revenue of about 6%.
Raw materials costs, mainly steel, are also increasing and Kingspan said that while it anticipates recovering these costs, there will be a lag. 'The impact of which is expected to result in continue margin pressure over the remainder of the year,' it added.
Kingspan said its order intake and pipeline activity tends to be a reasonable barometer of anticipated demand for the next six months. It said that orders for its insulated panels in the UK and Ireland are down 16%, but are well up in Central and Eastern Europe.
It also said its residential sector order intake is down considerably, reflecting the drop in new housing starts in Ireland. Its access floors order book is up marginally on last year.
The group said it continues to roll out its investment programme. In the second quarter of 2008, a new insulated panel line and a new insulatation board line will be commissioned in the UK, followed by a new insulated panel line in the Czech Republic. Progress is also being made on new capacity in Canada, Poland and the Netherlands.
'The group remains confident that the reduction in operating costs and the investment in capital leave it well placed to respond favourably to a future upturn in the economic environment,' it told the AGM.
'The board's view of the outlook for 2008 as a whole is unchanged from its statement of 3 March 2008, that an appreciable year-on-year reduction in earnings is likely for 2008,' it concluded.
Kingspan shares were down five cent at €7.40 in Dublin this afternoon.
