Kingspan shares fall despite profit rise in face of Covid and Brexit threats

Shares in building insulation company Kingspan fell by 4% despite it saying it expects profits to rise this year even in the face of the twin challenges of Covid and Brexit.

In a trading update, the Cavan-based group said overall sales for the first nine months of the year were down 5% on the same period last year. 

On an underlying basis — which strips out any contribution from acquisitions — revenues were down as much as 10%.

Kingspan’s core insulated panels division saw a 6% drop in sales up to the end of September.

Earlier this year, Kingspan suffered from closed building sites, due to Covid restrictions in Ireland and the UK, but it said some recovery was seen in the third quarter and that has continued.

It said its end markets are in “reasonable shape” against an uncertain and evolving backdrop and that raw material costs are rising. 

Overall, it said “a challenging recovery effort is underway”.

“Whilst conscious that much of the seasonally variable fourth quarter is still at play, in what is an untypical year, we expect to deliver a full-year trading profit marginally ahead of 2019,” the company said.

Last year Kingspan generated trading profits of €497m. Davy said even a marginal increase on that would be “comfortably” above its own initial forecast of €458m. Current analyst consensus is for Kingspan to see profits of €463m this year.

“The guidance indicates that second-half profits will be up by over 10% [year-on-year]. This would represent an excellent outcome in challenging circumstances,” said Davy analyst Flor O’Donoghue.

"Such a performance highlights Kingspan’s ability to adapt the business in all market conditions," said Goodbody analyst David O'Brien.