Building materials group Kingspan says it expects to report a 33% decline in operating profits due to the downturn in the Irish and UK construction industries.
In an interim management statement, the Co Cavan-based firm said sales had dropped 9% in the ten months to the end of October compared with the same time last year, but were down 3% on a constant currency basis.
'The group now expects to report a full year percentage decline in operating profits before exceptionals of approximately 33%,' it said.
As predicted in its interim results in August, Kingspan said the contraction in the building sector and rising raw material prices presented challenges in the second half of the year. It said that this was especially true for the months of September and October, when the effects of the slowdown in the global economic environment became more evident.
'This has resulted in further reductions in construction activity, particularly in the UK and Ireland,' the company stated. 'Residential construction in these markets has remained weak and activity in the commercial sector has slowed markedly during the period,' it added.
However, Kingspan said that activity in the commercial and industrial sectors in western and central Europe has remained 'robust'. The company's North American operations have also displayed more resilience than other sectors.
Kingspan said raw material prices rose sharply in the first nine months of the year but had eased a little last month. It said that current indications are that steel prices will fall further early next year, chemical prices are set to remain reasonably stable and transport costs should also decline.
The company said that in the medium term, it remains confident that both its product and geographic strategy, along with its positioning at the heart of low energy building technologies, will leave it well poised to take full advantage of renewed market opportunity once the world economy recovers from the current downturn.
'In the short term, management are continuing to take significant actions and initiatives to reduce costs in anticipation of the fact that 2009 is almost certain to provide even tougher challenges than those encountered in the current year,' the company said.
Kingspan shares slumped 42 cent to €3.28 in Dublin this afternoon - down over 11%.
