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Kingspan reports 34% Sales Drop
19th May 2009
Irish building products conglomerate Kingspan Group Plc, better known to many within the oil heating industry as the manufacturer of Atlas, Deso, PC Rotomoulding, Roug, Titan Eko and Titan Environmental Oil Tanks and suppliers of Watchman Sonic electronic oil tank contents gauges, has reported a 34% decline in sales during the first four months of 2009.
Excluding acquisitions from the figure and the decline amounts to some 39% (-33% on a constant currency basis). The widely expected contraction in new building activity was partly offset by improving thermal standards, an encouraging trend in the residential refurbishment market, and timely action to reduce costs and working capital at all levels throughout the organisation.
The Group's Environmental & Renewables Division which includes Kingspan's Oil and Liquid Storage Tank manufacturing interests reported a sales decrease of 39% (-30% on constant currency). According to the Group, the year on year percentage decline in activity was significant and the Environmental & Renewables Business has been "shrinking marginally month by month".
Sales decreases in the Group's other operating divisions ranged from -18% in the Access Floors Division to -70% in the Offsite Business.
Geographically, and the weakness in sales activity was most pronounced in the British Isles where sales into the non-residential sector suffered most. The Group reports that sales in the rest of Western Europe performed more robustly, although lower than during the prior year, and the Central & Eastern Europe markets began the year markedly down on 2008 but the Group hopes they should prove more steady in the coming months.
Sales in North America were well up due to the insulated panels acquisition in the United States in September 2008. Excluding the effect of this business sales in this region were down and are expected to fall further for the remainder of the year. The acquired business performed well in the last quarter of 2008, and as anticipated at the point of acquisition, the first four months of 2009 showed a decline in revenues.
In response to current market conditions, cost containment plans have been executed by the Group since the middle of 2007 and in the current year the fixed cost base has been lowered by an annualised sum of approximately €50mn. Working capital has been reduced in line with internal targets and further reductions will be achieved on both fronts through the remainder of the year to ensure balance sheet stability is maintained.
Kingspan will issue its half-year financial report for the period ending 30 June 2009 on Monday 24 August 2009.
