Search Share Prices
Kingspan warns of further declines UK construction amid 'Brexit quagmire'
Irish insulation and building envelope solutions group Kingspan warned investors on Friday that a steep decline seen in demand for its insulated panels was likely to continue due to the "Brexit quagmire".
Kingspan said that while trading had remained relatively resilient throughout much of the year, its full-year results showed a decline in large-scale non-residential projects in the UK towards the end of the year due to future uncertainties regarding the Irish border.
UK order intake, which makes up about a quarter of the firm's total sales, dropped 15% on the previous year, however, Kingspan still managed to scrape out an 11% year-on-year rise in its full-year trading profits.
Kingspan cautioned its investors that with general confidence dwindling and inward investment falling off as Brexit drew neat, Britain was heading into a more difficult phase.
"I think what we're seeing is a little bit of investor pullback when it comes to construction, it's quite logical that investors would hang back given the present uncertainty to see which direction things are going," Kingspan chief executive Gene Murtagh said.
"What suffers up front is generally low rise commercial and industrial and that's where we've been feeling it in the insulated panel business. I would expect it to continue for sure, but at what rate it is really difficult to call," he told Reuters.
To cut back its reliance on the UK, Kingspan diversified into other European markets in 2017 and also entered the South American market in an unprecedented 600m acquisition spree that helped drive the 377.5m trading profit and 18% boost in revenue to 3.67bn.
The group reported a trading margin of 10.3%, down 70 basis points from the previous year.
Murtagh, said, "2017 was another year of strong performance for Kingspan. We have continued our globalisation strategy with several significant acquisitions, including establishing a market leading presence in Latin America."
"Our new Light & Air division is performing ahead of expectations and expanding the range of product solutions the business offers. The challenge of increased input costs has been effectively managed to minimise the impact on profit margins. Notwithstanding the weakening UK market our well-diversified business is well placed for the longer term," he added.
As of 1200 GMT, shares had dropped 6.36% to 35.02 each.