Building materials and insulation group Kingspan today forecast a 33 per cent drop in operating profit this year as construction activity slows and warned trading conditions next year may be even more difficult.
The Co Cavan-based group said sales over the 10 months to the end of October were 9 per cent lower. When currency movements are excluded the drop was just 3 per cent.
At 9.38am Kingspan shares were unchanged in Dublin at €3.70 giving the company a market capitalisation of €614.6 million. The group's shares have fallen 64 per cent so far this year.
Kingspan said the global construction slowdown had accelerated in September and October "particularly in the UK and Ireland".
"Residential construction in these markets has remained weak, and activity in the commercial sector has slowed markedly during the period," the group said.
In contrast Kingspan said commercial and industrial activity in western and Central Europe remained robust and that its North American market had displayed "resilience".
Kingspan said it will book a €25 million ($31.4 million) cost this year for overhauling businesses.
"In the short term, management are continuing to take significant actions and initiatives to reduce costs in anticipation of the fact that 2009 is almost certain to provide even tougher challenges than those encountered in the current year," Kingspan said.
In a note to investors Davy Stockbrokers said the statement was as gloomy as expected. A 33 per cent fall in underlying EBIT for the year works out at €158 million for the year.
Davy said it appeared margins were coming under pressure as revenues were relatively solid over the period adding that earlier 2009 forecasts from the group appeared overly optimistic.
Kingspan said next year is "almost certain to provide even tougher challenges than those encountered in the current year".
While raw material prices had risen sharply during the year to September they started to ease in October, the company said.
