Irish building supplies company Kingspan said a jump in profits in the first half of the year is unlikely to be sustained in the second half as the euro zone crisis is dragging down activity in some markets. The biggest producer of building insulation in Britain, Ireland, Canada and Australasia attributed a 14 percent jump in its half-year profit figure to a strong performance in markets such as Germany and Central Europe.
But growth slowed in the second quarter as the euro zone area came under further pressure, and a decline in activiy in construction markets such as the Benelux and Netherlands is expected to continue in the second half.
“This moderation in recent activity levels coincided with weakening sentiment generally across Europe driven by interminable political indecision,” said Chief Executive Gene Murtagh.
“By comparison to last year it (the second half) is probably going to be weaker,” he told Reuters. The comments echo those made last week by larger Irish building materials firm CRH which said it expected the euro zone’s economic problems to deepen a slide in sales in the second half of 2012, preventing it from raising profits.
Kingspan has weathered the downturn by taking advantage of a shift towards more energy-efficient building standards, particularly in its largest market, the UK, which it added had been steady in the first half of 2012.
Kingspan posted a 14 percent rise on a constant currency basis in operating profit to 52.7 million euros ($64.80 million)in the six months to end-July, up from 44.2 million the previous year and in line with analysts’ expectations. Revenue rose 3 percent to 757.4 million euros while debt was 171.2 million euros, down from 207.2 million a year ago. The company bumped up its global presence last week with two acquisitions in Europe and the Middle East, including buying the insulated panels arm of ThyssenKrupp for 65 million euros ($80 million).
( C) Reuters