Chief executive, Gene Murtagh said: 'Whilst margins contracted somewhat, we anticipate further recovery of input increases in the second half.'
In the insulation board market revenue rose 8% in the first half of 2017 to EUR 373.7 m compared to EUR 347.4 m in the first half of 2016.
In the UK, insulation board sales revenue grew significantly in the first half with modest overall volume supplemented by ‘pronounced selling price increases resulting from steep chemical inflation we have been experiencing. The latter, when combined with the associated supply constraints imposed on the market, has created an environment for Kingspan to accelerate conversion to our proprietary [phenolic] KoolTherm technology which now represents 35% of average board sales worldwide at 34% in the UK,’ the firm said.
Kingspan added that price inflation recovery was slow in mainland Europe during the first half. The firm is again converting users to its KoolTherm products and said it intends ‘developing a greenfield manufacturing facility in the Nordics during 2018. In the Americas, the company intends to develop the specification for its KoolTherm products although progress will be slow.
In Australia and the Middle East, the company is pushing its KoolTherm products which are now supported by a plant opening in Melbourne and a board line was commissioned in the UAE earlier this year the company aims to develop a KoolTherm facility there over the coming 2 to 3 years.
Insulated panels generated revenue of EUR 1.1 bn in the first half of 2017 compared to EUR 949.5 m in the first half of 2016, growth of 17%. The firm said that activity across most of Western Europe was strong in the first half of 2017 with Benelux, France and Nordic countries being ‘particular standouts.’
However, in Germany revenue was ‘broadly flat’ and ‘order intake also presented a challenge’ as the company pushes to recover margins in an increasingly competitive market.
The UK market was strong in the first quarter and slowed in the second as expected.
In the Americas, insulated panel revenue and volumes are both comfortably ahead of the same period last year ‘as with most of our markets worldwide, the recovery of raw material inflation was central, particularly in the second quarter. Our strategy has been to fully recover, even at the expense of market share loss,’ the company said.
This, the firm said, was particularly pronounced in Canada where ‘much of the market has not responded to the cost increases. Our near-term approaches to hold our line as we anticipate further increases in the second half.’
The company said that the primary drivers for growth were the increasing demand for energy efficiency, a robust recovery most of Western Europe and a ‘significant inflationary dimension’ in the second quarter.
The firm said that it has invested EUR 64 m, which EUR 50 m was on internal capital projects and EUR 14 m were on acquisitions one of which marks the firm's entry into South America. The firm said that its QuadCore products represent 5% of its insulated panel sales up from zero in 2016, its phenolic Kooltherm range accounting for 35% of Kingspan rigid board sales well ahead of the same period last year.