A slowdown in construction activity across the globe following the coronavirus outbreak led to an inevitable contraction in Kingspan’s (KGP) order intake during the first half of the year. However, the 8 per cent decline in revenue recorded by the Irish group was less severe than that recorded by fellow building materials suppliers such as Tyman (TYMN) and Breedon (BREE), as it benefited from broader geographical diversification within its end markets.
Orders started to pick-up during May and rebounded further in June. Nevertheless, management expects investment decisions across many sectors to be curtailed through next year. The core insulated panel division - accounting for almost two-thirds of revenue - suffered a weakening of orders from the UK and North America, which would suggest lower revenue during the latter part of the year.
However, the shutdown in many of the group’s end markets helped boost free cashflow and meant that net debt declined by almost a third, standing at just 0.8 times cash profits. That was even after the completion of three major acquisitions that totalled more than €400m (£362m), including daylighting and smoke management systems provider Colt, and the decommissioning of new production facilities in Brazil, Russia, and Sweden.
Consensus forecasts put adjusted EPS at 160c for 2020, rising to 191c the following year.
| KINGSPAN (KGP) | ||||
| ORD PRICE: | 6,895c | MARKET VALUE: | €12.5bn | |
| TOUCH: | 6,875-6,900c | 12-MONTH HIGH: | 6,970c | LOW: 3,730c |
| DIVIDEND YIELD: | Nil | PE RATIO: | 36 | |
| NET ASSET VALUE: | 1,185c* | NET DEBT: | 28% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (c) | Dividend per share (c) |
| 2019 | 2.24 | 209 | 93.8 | 13.0 |
| 2020 | 2.07 | 178 | 79.8 | nil |
| % change | -8 | -15 | -15 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1 = €1.12. *Includes intangible assets of €1.6bn, or 874c a share | ||||
