Kingspan overcomes large cost increases in record quarter of sales

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Kingspan had a record quarter for the first three months of the year, weathering the sharp rise in raw material costs for its insulation board and other building products.

The Cavan-based company posted sales of €1.89 billion for the period, up 47 percent year-on-year and still 31 percent better excluding the contribution from new acquisitions.

The group said in a statement to the exchange that its trading outlook for the second quarter was positive with a strong backlog.

However, the company also warned that persistent inflation is likely to squeeze margins this year, suggesting the company may struggle to continue passing the price increases on to customers.

Nonetheless, Kingspan pointed to “inflationary pricing” as a key reason for the improved sales performance of its insulation panels and insulation divisions.

With the company reporting a global backlog for insulated panels that is 19 percent higher than at the same time last year, demand is likely to hold up well and perhaps retain some of the group’s pricing power.

Goodbody analyst David O’Brien said most of the company’s sales growth was coming from the price channel, but added that commodity inflation would be a “challenge” from here, with margins likely to erode somewhat.

Kingspan said its acquisition pipeline is strong, although no new resources would be committed beyond the €800 million already announced.

The statement said the Troldtekt acquisition had received competition approval and is expected to close shortly.

The EU last week closed an investigation into Kingspan’s proposed takeover of Slovenian rival Trimo, which collapsed earlier this year.

Belgian insulation company Recticel announced last month that it had signed an agreement to acquire Trimo.

Kingspan confirmed to the Irish Independent that it had pulled out of the process to acquire Trimo’s parent company, but gave no reason.

“We are fully committed to expanding our market position in energy-saving and sustainable building products, contributing to a more sustainable built environment, improving energy security and supporting the EU Green Deal,” the company said in a statement.

Slovenian media reported in January that the proposed merger fell through due to difficulties in getting it through European competition authorities. Kingspan denied the reports at the time.

The European Commission said last week that it “notes” Kingspan and Trimo-owner European Architectural Systems’ decision to “terminate their proposed agreement”.

European Commission vice-president and competition chief Margrethe Vestager had expressed concerns that the merger could reduce competition, affect quality and increase prices in the insulation market.

She said insulation panels are key to meeting the EU’s climate targets and “must be available to customers at affordable prices”.

https://www.independent.ie/business/irish/kingspan-overcomes-big-cost-increases-in-record-quarter-for-sales-41600509.html Kingspan overcomes large cost increases in record quarter of sales

Fry Electronics Team

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