Substantial growth has been achieved by Kingspan Group, the Cavan-based building materials company, with a 157 per cent increase in pre-tax profit from £5.09 million to £13.07 million in the six months to June 30th, 1997. The market showed its approval and pushed the share up 55p to a record £10.
Acquisitions accounted for some of the growth but, even if these earnings are excluded, Kingspan still doubled its gross profits. The results are much better than expected and brokers' profits projections for the full year are likely to be revised upwards. It now appears likely that earnings per share will rise from 36.6p to at least 60p. The latest results include full contributions from the acquisitions made at various stages in 1996 and the Ward business from mid-January 1997. Ward has traded better than expected due to "efficiencies and other synergies of the acquisition being implemented ahead of schedule in addition to an increased level of construction activity in the UK", chairman, Mr Eugene Murtagh said.
"We did as well (in the first half) as the full year (1996)," he added. "There is still a lot in it."
The Kooltherm acquisition a year ago continued to provide Kingspan with technology and market opportunities this year, he said. The group experienced an improvement in its three main divisions and in all its major markets. Mr Murtagh told The Irish Times that, while the construction industry in the Republic grew by 20 per cent, Kingspan's end of the market was growing at only 10 per cent to 10.5 per cent. Nevertheless, "we still achieved 20 per cent to 21 per cent increase".
In Britain, its area of business grew by 3.5 per cent, he said. However, the group's British business managed an 11 per cent increase in turnover.
Group sales doubled from £52.75 million to £117.85 million. Some £31 million of this was due to acquisitions but the underlying growth was still a strong 65 per cent. Reflecting real growth, earnings per share doubled from 14.3p to 29.9p. The interim dividend, however, was only increased by 24 per cent from 1.7p to 2.1p. Asked why the dividend was not increased by a higher percentage to reflect the growth in earnings, Mr Murtagh said a high dividend could have been paid but the company tries to use the funds well in the business. The focus is to "become very strong in any markets we are in". And he is very optimistic about the future. The outlook for its main markets in Ireland, Britain, Benelux and Germany "looks favourable for the immediate future". Its activities over the past few years and the "timely acquisition of Kooltherm and Ward has ensured that the group's earnings reflect these relatively favourable market conditions". The gearing has been reduced from 98 per cent to 75 per cent. Mr Murtagh said this should fall to the mid-thirties by the end of the year, provided there were no more acquisitions. This places it in a strong position "to plan for future developments". Strategic acquisitions remain high on the group's agenda, according to Mr Murtagh, and it is still looking at eastern and central Europe but no deals are imminent.
