Kingspan, based in Cavan, experienced a minor dip in sales in the most recent quarter, whilst also cautioning that primary input costs could potentially increase in the near future. In spite of a somewhat lacklustre commencement to the year, which can partly be attributed to seasonal factors, the firm’s performance in the first quarter was deemed satisfactory. This was announced in a trading statement covering the first quarter. The annual general meeting of Kingspan took place this morning.
The total sales for the group were in the region of €2 billion for the quarter, trailing the previous year by 1 per cent, or 8 per cent on a core basis. Despite trading volumes being favourable and prices being steady since the start of the year, they still lagged behind the previous year due to a reduction in raw material prices. The company warned that primary costs could potentially increase soon.
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In terms of markets, the Americas were on par with the previous year’s robust start, while Western Europe was largely muted due to seasonal factors, taking time to pick up. In other regions, Central and Eastern Europe continued to present challenging conditions, while strong sales growth was noted in the Middle East and India.
Sales of insulated panels were down by 6 per cent, or 9 per cent on a basic level; however, global sales volumes increased moderately compared to the first quarter of the preceding year. Group-level order intake volumes observed year-on-year growth, which Kingspan declares bodes well for second-quarter sales activity.
Boosted by the early January acquisition of a majority stake in Steico, insulation sales were up 13 per cent in the first quarter. However, underlying sales were down by 14 per cent as a reduction in pricing year-on-year negated a slight growth in rigid boards sales.
Technical insulation, which had a slow start as expected, has gained momentum in the recent weeks. Regarding their partnership with Steico, Kingspan conveyed their optimism about the potential opportunities in the market, channel, and innovation to their investors.
The company recently entered the mineral wool insulation category, with the acquisition of Bachl’s stonewool plant. “Our range of solutions is unmatched in catering to the thermal, acoustic, and fire performance requirements of an extensive range of building applications,” said the company.
Kingspan has issued a statement indicating a solid and ever-expanding pipeline of potential opportunities within the data centre sector, especially fueled by the surge in AI demand. As of March 31st, the firm’s net debt stood at €1.3 billion, up by €311 million. This rise in net debt is primarily due to the €364 million expenditure incurred to secure controlling interest in Steico.
At present, Kingspan describes their liquidity situation as “extremely healthy” with cash reserves and undrawn facilities amounting to €1.7 billion. The company’s balance sheet remains resilient, with current leverage levels hovering about 1.2 times the ratio of net debt to earnings before interest, taxes, depreciation, and amortisation.
Following the upcoming AGM on Friday, the board plans to initiate a share buyback scheme of 1.5 million standard shares with the aim of mitigating dilution from share releases. The company’s projected trading outlook is said to be “promising overall”, and a “positive trend” observed in order intake for the majority of 2023 has sustained into 2024.
Moreover, the firm noted that the volume of orders received for each month of 2024 so far has exceeded the number for the corresponding month in the previous year. The company predicts that pricing levels annually should become more closely aligned by mid-year. With a substantial portion of the second quarter left, Kingspan anticipates delivering a trading profit for the first half of the year that is on par with the same period in 2023.