ANALYSIS:KINGSPAN CHIEF executive Gene Murtagh is an optimist by nature, but even he found it difficult to be positive about the construction group's near-term future. "Our markets are much more fluid at the moment," he said yesterday, writes Ciarán Hancock, Business Correspondent
Kingspan is a well-managed, well-funded maker of insulation products, access floors, solar panels and other energy-saving items used to build homes. Like other groups in the construction sector, it has been caught in a pincer movement - slowing residential markets in Ireland and Britain and a global credit squeeze that has seen debt markets dry up for developers and investors alike.
Consumer confidence is low, with no obvious catalyst for this to change in the short-term.
When asked if he would advise prospective housebuyers in Ireland to make the leap now or sit on their hands in the hope of prices falling further, Mr Murtagh replied: "That's an awful question to ask me . . . all I'll say is that I did buy a home recently."
Every little helps, but Kingspan, like other Irish construction groups, needs housebuyers to re-emerge in their thousands for the market to get a real kicker.
Analysts estimate that Kingspan's earnings in 2008 will be up to 30 per cent below last year. The outlook for 2009 is also gloomy.
One crumb of comfort for Murtagh was that the share price fell by less than 5 per cent. The bad news had already been factored into its share price.
On June 1st last year, Kingspan's shares traded at €22.38 and it had a market capitalisation of €3.8 billion. It is now worth €1.5 billion.
The Cavan-based company has begun cutting its overheads to reflect the slowdown in business.
Kingspan is well diversified and plans to spend €250 million on capital expenditure this year. Europe and North America are performing well, according to Mr Murtagh, although these only account for about one-third of its sales.
Kingspan is also targeting climate change for future growth. Homes will have to be more energy efficient in the future if steep reductions in carbon emissions are to be achieved. Kingspan plans to be in the vanguard.
It seems that every burst ozone layer has a silver lining.
