Kingspan have revealed a changed trading environment, with its first four months of the year described as ‘challenging’ in its Interim Management Statement.

Although achieving record growth and profitability in 2007 the materials group referred to challenging trading conditions that charachterised their first quarter, with new residential construction slowing in both Ireland and the UK.

However, low rise commercial sector has slowed to a lesser extent and office construction remained strong here, as well as in North America. Kingspan also reported repeated growth in Central & Eastern Europe markets as economic conditions thrive there.
 

Kingspan says that sales revenue has been at similar levels to those achieved last year - at constant exchange rates. However, it says the effect of the exchange rate movements between the US dollar, sterling and the euro has resulted in a decline in sales revenue of about 6%.

Advertisement, raw materials costs, mainly steel, are also increasing and Kingspan says that while it anticipates recovering these costs, there will be a lag. 'The impact of which is expected to result in continue margin pressure over the remainder of the year,' it adds.

Kingspan says its order intake and pipeline activity tends to be a reasonable barometer of anticipated demand for the next six months. It says that orders for its insulated panels in the UK and Ireland are down 16%, but are well up in Central and Eastern Europe.

It also says that its residential sector order intake is down considerably, reflecting the drop in new hosuing starts in Ireland. Its access floors order book is up marginally on last year.

The group says it continues to roll out its investment programme. In the second quarter of 2008, a new insulated panel line and a new insulatation board line will be commissioned in the UK, followed by a new insulated panel line in the Czech Republic. Progress is also being made on new capacity in Canada, Poland and the Netherlands.

'The group remains confident that the reduction in operating costs and the investment in capital leave it well placed to respond favourably to a future upturn in the economic environment,' it says in its trading update.

'The board's view of the outlook for 2008 as a whole is unchanged from its statement of 3 March 2008, that an appreciable year-on-year reduction in earnings is likely for 2008,' it concludes.

Source: RTE