The chief executive of building materials group Kingspan says the Irish market continues to be 'exceptionally difficult'. Gene Murtagh said it would be a number of years before the group expected any 'decent lift' on the residential side of Irish construction.
He was speaking on RTE radio after Kingspan reported that revenue for the first six months of the year fell by 35% to €552m. Pre-tax profits dropped 70%, from €83.9m to €25m, but the results were better than analysts had expected.
The company, which owns timber frame maker Kingspan Century, said its earnings per share fell by 70%, and its operating profit fell by 66% to €30m. The company will not be paying an interim dividend.
Mr Murtagh said the UK residential sector would be the first area to emerge from recession, as there have been signs of 'a little bit of a lift' over the last few months.
He said Kingspan had seen a significant upturn in the refurbishment side of the business in Ireland, which indicated that although people were not building new buildings, they were upgrading them.
Mr Murtagh said 'improvement' in the market was not a word Kingspan would use at the moment, and stability was the main aim for now.
Shares in Kingspan closed 76 points higher at €6.15 in Dublin this evening, a gain of 15%.
Hopes for more stable second half
The company said it had cut costs by €60m over the past 18 months to offset the decline in sales. It said demand for most of its products had stabilised in recent months, and there should be a more stable performance in the second half of the year, though activity would still be significantly down on 2008.
Kingspan said the outlook for the broader construction sector was less certain, but the signs were that any improvement in activity was unlikely in the near term.
In the first six months of this year, the weakness of sterling knocked €51m off turnover and €4m off operating profit.
A breakdown of the results showed that sales in Kingspan's insulated panels business, its biggest, dropped 32% to €284m, with sales in Ireland down 67%.
Insulation sales dropped 45% to €106.9m, while access floor sales were down 18% to €80m. Environmental and renewables sales fell 42% to €81.6m.
Kingspan said it had reclassified assets - mainly property - with a book value of €19.5m as 'assets held for sale', but it did not expect to make any sales until next year.
