Aug 20, 2021

Kingspan records half-year profits of €329m

construction
Kingspan
Insulation
UK
Dominic Ellis
3 min
Insulated panels are the 'standout' for Kingspan as it records a 64% spike in profit in the half year to June 30

Kingspan Group recorded a 64% rise in trading profit to €329m and 41% rise in revenues to €2.9bn in the half year to June 30 amid an "unprecedented and ongoing" raw material inflation and price recovery.

Group trading margin was 11.3%, an increase of 160bps versus the same period in 2020, thanks to strong underlying volume growth of 30% and 27% in Insulated Panels and Insulation Boards respectively, in half-year figures submitted to the London Stock Exchange.

Acquisitions contributed 8% to sales growth and 7% to trading profit growth in the period. However net debt stands at €601.7m (H1 2020: €437.9m) as the group invested a total of €496m in acquisitions, capex and financial investments during the period. Specific highlights included:

  • Insulated Panels sales increase of 44% driven by strong momentum generally in construction activity, raw material led price growth further enhanced by strong demand in high growth sectors. Order backlog strongly ahead of the same point in 2020
     
  • Insulation Boards sales increase of 36% reflecting strong demand in key markets and inflation recovery on pricing. Acquisition of Logstor, a leading global supplier of technical insulation solutions, completed before the period end.
  • Light & Air sales growth of 39% reflecting the acquisition of Colt Group in Q2 2020 and the acquisition of Skydome in the period.
     
  • Water & Energy sales increase of 36% reflecting a strong performance across all key markets, with the exception of Australasia, and further acquisition activity
     
  • Data & Flooring sales growth of 22% reflecting strong datacentre activity and ongoing development of the European operations.

Gene Murtagh, Chief Executive of Kingspan, said growth in the first half of the year has been remarkably strong with revenue and trading profit at record levels driven by high levels of demand and a global recovery in the construction sector.

"Despite inflation in our input costs, effective price management has helped increase trading margins, with a stand out performance in our largest division - insulated panels," he said. 

"Our strategy of expanding through acquisition and diversifying geographically has continued, with ten acquisitions made during the period across four continents, and a robust balance sheet positioned to support future growth. We also continue to invest in organic expansion, product innovation, digitalisation, enhanced compliance and executing on our ambitious Planet Passionate sustainability targets.

A strong pipeline of future demand means we are positive about the outlook for the second half of the year. Longer term, the decarbonisation agenda and increasing awareness of the need to reduce the contribution of the built environment to climate change is supportive of our focus on delivering customers with high performance solutions that deliver best-in-class thermal performance."

Andy Murphy, Director, Edison Group, said Kingspan is a clear beneficiary of the global move towards decarbonisation which is boosting demand, and it ended the period with a strong order book.

"It is also facing strong raw material inflation and constrained availability which it thinks will persist for at least the rest of this year and into 2022, but that demand will also remain robust long term. Kingspan trades on a PER of 34x to December falling to 31x in 2022. This stock always looks expensive but on a PER basis, but it rarely fails to deliver."

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