Kingspan, a global leader in high performance insulation and building envelope solutions, has issued its half-yearly financial report for the six-month period ended 30 June 2018 posting revenue of in excess of €2bn.
The first half of 2018 was a record for Kingspan with revenue in the period surpassing €2bn for the first time. Trading profit was ahead by 10% to €195.3m and trading margin was 9.7%, partly reflecting the initial dilutive effect of recent acquisitions and an element of lag in the recovery of raw material increases.
Following a slow start to the year hampered by a prolonged winter, momentum improved notably in the second quarter in which revenue was ahead by 21% (+7% on an underlying basis). The improvement was particularly evident in North America and Germany whilst LATAM continued its recent strong performance. The UK was particularly robust given the ongoing uncertainty surrounding withdrawal from the EU. Across the Group, order intake levels improved in many regions, without the extreme raw material supply constraints that impacted progress all through last year and inadvertently benefited competing solutions.
By business, Insulated Panels revenue was ahead by 14% and Insulation Boards was up by 15%, the latter reflecting inflation and a positive mix towards Kooltherm®, albeit on softer volumes. Light & Air continued its advance with sales ahead by 57%, whilst Water & Energy sales were broadly in line with prior year with Access Floors modestly behind.
During the period we invested €335m, €265m of which was on acquisitions (including deferred consideration) with an additional €70m on internal capital projects across the business. Furthermore, since the period end we completed the acquisition of Balex in Poland and established Kingspan Jindal in India for a combined outlay of €220m.
Gene Murtagh, Chief Executive of Kingspan commented: “We delivered a record performance in the first half of the year, with revenue over €2bn for the first time. Performance was helped by improved momentum in the second quarter after a sluggish start to the year due to prolonged winter weather conditions. This momentum has continued into the second half in a number of key markets, and underpins our encouraging outlook for the rest of the year. Kingspan’s geographical footprint continues to expand, with development activity in Latin America, Southern Europe and India opening up exciting growth opportunities.”
- Revenue up 15% to €2.0bn, (pre-currency, up 19%).
- Trading profit* up 10% to €195.3m, (pre-currency, up 13%).
- Group trading margin** of 9.7%, a decrease of 50bps versus the same period in 2017.
- Acquisitions contributed 15% to sales growth and 12% to trading profit growth in the period.
- Net debt of €739.4m (H1 2017: €440.3m). Net debt to EBITDA of 1.59x (H1 2017: 1.06x).
- Basic EPS up 8% to 80.7 cent (H1 2017: 74.4 cent).
- Interim dividend per share up 9% to 12.0 cent (H1 2017: 11.0 cent).
- ROCE of 15.6% (H1 2017: 17.3%), 16.6% when the annualised impact of acquisitions is taken into account.
- Insulated Panels sales growth of 14% with a notable improvement in most key markets in the second quarter after a sluggish start. UK solid overall and improved since the turn of the year. Quadcore™ revenue increased by 76%, now 6% of global insulated panel sales and 18% of UK and Ireland.
- Insulation Board sales growth of 15% reflecting, in the main, inflation recovery on pricing. Kooltherm® revenue increased by 12%, now comprising 35% of rigid board sales (37% excluding acquisitions).
- Light & Air sales of €128.6m, were up 57% (up 11% pre-currency and acquisitions). Good performance in Continental Europe offsetting softer activity in the US. Second half is seasonally more significant.
- Water & Energy (formerly Environmental) broadly in line with prior year after a slow start. Acquisition in the Nordic region completed during the period.
- Access Floors sales 7% behind H1 2017 reflecting a subdued US market and some slowdown in the UK.
- Significant position established in Southern European insulated panels and boards markets through the acquisition of Synthesia Group.
- Entry into India, an embryonic insulation market, with the establishment of Kingspan Jindal.
Overview of results
Group revenue increased by 15% to €2,009.9m (H1 2017: €1,749.3m) and trading profit increased by 10% to €195.3m (H1 2017: €177.8m). This represents a 19% increase in sales and a 13% increase in trading profit on a constant currency basis. The Group’s trading margin decreased by 50bps to 9.7% (H1 2017: 10.2%) reflecting the divisional mix of earnings, an element of lag in recovery of input inflation as well as the initially dilutive effect of recent acquisitions. The amortisation charge in respect of intangibles was €9.0m compared to €7.5m in the first half of 2017 with the increase reflecting, primarily, the year on year effect of intangible assets acquired as part of business acquisition activity during 2017. Group operating profit after amortisation and non-trading items grew 9% to €186.3m. Profit after tax was €146.7m compared to €133.1m in the first half of 2017, driven in the main by the growth in trading profit. Basic EPS for the period was 80.7 cent, representing an increase of 8% on the first half of 2017 (H1 2017: 74.4 cent).