IN ITS NINE MONTH trading update, Kingspan Group plc reports a sales fall to €6.14bn, down a touch on the same period in the prior year and in the third quarter. Sales pre currency and acquisitions were down 7% in the year to date and in the third quarter.

Kingspan Group Sales Fall

Nevertheless, the global manufacturer of insulation and building envelope products, said despite the reduction in sales in the nine months to 30 September, the company remains on track to deliver a record full year trading profit, comfortably ahead of 2022.

Insulated Panels

Insulated Panels sales improved sequentially in the third quarter, but were down 9%, and by 10% in the first nine months.

Third quarter sales volumes were up mid-single digit globally. Activity in the Americas remains strong overall, France is robust.

However, the UK market has weakened considerably since mid-year with central and eastern Europe stable at sluggish levels of activity.

Kingspan says its QuadCoreTM LEC Panels are attracting interest across all key markets and its PowerPanel product is on track for launch in the first half of 2024. Whilst activity levels overall are subdued, global order placement has been ahead for the last five months in succession.

Insulation

Insulation sales in the first nine months were down 7% and by 10% in the third quarter. Sales pre currency and acquisitions were down 8% year to date and by 9% in the third quarter.

Board sales volumes recorded high single digit volume growth in the third quarter.

Acoustic insulation is performing well and the company says it continues to make inroads in the natural insulation category, boosted by Kingspan’s acquisition of 51% of Steico, expected to complete early in 2024.

District heating applications could see some project deferral in the current interest rate environment. AlphaCore® is building an early-stage specification bank and Optim-R® continues to advance, particularly in the US.

Light, Air and Water

Light, Air + Water sales in the first nine months were down 2% and by 3% in the third quarter. Underlying sales were in line year to date and were down 1% in the third quarter. Profit margin “continues to progress”, Kingspan reports, reflecting a combination of ongoing advancement in specification activity and category breadth.

Roofing and Waterproofing

Roofing + Waterproofing experienced a difficult trading environment in the year to date although the integration of the businesses acquired over the last 12 months is progressing fully to plan, the company says.

Integrated Roofing Solution

Divisional sales are in excess of €500m on an annualised basis. A number of commercial initiatives are progressing with Insulation to build a Kingspan integrated roofing solution. Kingspan plans to double sales in the roofing and waterproofing division within the next three years and has taken early steps in planning for multi-site US capacity.

To achieve this long-term objective, on 10 October 2023, Kingspan announced a cash offer to the shareholders in Nordic Waterproofing Holding AB of SEK160 per share. The formal offer document will be issued by the end of November with an anticipated acceptance period to February 2024.

Data and Flooring

Data + Flooring sales in the first nine months were up 8% and up by 3% in the third quarter. Data centre activity continues to drive performance with an extraordinary pipeline of activity for the years ahead, the company reports.

Net debt at the end of December 2023 is expected to reduce by a third versus prior year to approximately €1.05bn (net debt/EBITDA 1.0x). This incorporates a development spend (acquisitions and capex) of c. €450m in the current year. The Group’s working capital investment is now back to more normal levels of efficiency than the elevated position in the prior year.

Looking Ahead

Kingspan comments “it is difficult to look too far ahead in this environment”. It says that whilst there are challenges in the end markets, the global backlog of orders has remained reasonably stable over the last number of months. Kingspan’s activity pipeline in data technology, EV automotive, and refurbishment activity in general are all notable positives.

The company expects to deliver a record full year trading profit in the region of €875m.

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