Kingspan – Solid Result. Management navigating through a slowdown in the UK and significant input cost inflation. “HOLD”
Kingspan released a trading update for the nine month period to the end of September this morning.
Overall, the results were solid driven by buoyant underlying markets. Sales for the Group were €2.69 billion up 19% (21% in constant currency) compared to last year. Third quarter sales were up 17% (20% in constant currency). Underlying sales, pre currency and acquisitions, were up 11% year to date and were up 13% in Q3.
The expected pipeline remains strong across most markets, although trending weaker in the UK recently. Additionally, management said they saw significant input cost inflation in Q3 and anticiate this to continue in to Q4 but albeit less pronounced as chemical costs reach their peak. Management expect to deliver full year trading profit of c.10% or c.€375 million which is in line with analyst expectations.
Insulated Panels which accounts for 65% of Group revenue reported sales up 16% (+18% in constant currency) for the nine months to the end of September and increased Q3 sales by 13% (+15% in constant currency). Insulation Board sales revenue was up 10% (+13% in constant currency) for the first nine months of the year and was up 16% (19% in constant currency) in Q3. Environmental, which accounts for 5% of Group revenue reported sales up 12% (+17% in constant currency) for the first nine months of the year and was up 11% (+14% in constant currency) in Q3. Additionally, Access Floors delivered 2% (+5% in constant currency) sales growth for the nine months to the end of September and 4% (+9% in constant currency) sales growth in Q3. Management did highlight how they were seeing a softening in UK office activity but that growth in data centre activity was encouraging.
Kingspan currently trades on 19x forward earnings, 13.6x EV/EBITDA and has a 1.2% dividend yield. We reiterate our recommendation “HOLD” with a price target of €35.50.

Dylan Simmonds
Equity Analyst

Darren McKinley, CFA
Senior Equity Analyst