Cavan, Ireland - Kingspan Group plc, the major manufacturer of polyurethane-based insulation products, has seen a significant decline in sales in Q1 2009, the company's management said 14 May.
Overall, Kingspan's sales have declined by 34 percent to Euro 350 million ($476 million) compared to the same period last year, and by 39 percent excluding acquisitions. "The contraction in building activity was partly offset by improving thermal standards, an encouraging trend in the residential refurbishment market, and timely action to reduce costs and working capital at all levels throughout the organisation," Kingspan commented.
The drop in sales is characterised by customer reluctance to commit to new-build construction projects during the economic downturn, the company said, adding that the UK and Ireland suffered the most pronounced declines in sales.
The company's insulated panel sales were down 30 percent (41 percent excluding acquisitions) compared to the same period in 2008. Order intake was down by 43 percent in UK, Ireland and Western Europe in Q1, although April showed a slight improvement. In Central/Eastern Europe and North America, order intake was down 49 percent and 30 percent respectively, Kingspan said.
"Despite the current weakness, the longer-term potential in the US remains very compelling, particularly as the building energy standards are set to rise substantially into the future," the company commented.
Insulation Board sales were down 32 percent in Q1 2009, which was ahead of market conditions, and was achieved through an improved mix of sales and a solid refurbishment market, Kingspan said.
The company has had cost-containment plans underway since 2007, lowering its fixed cost base in 2009 by an annualised sum of around Euro 50 million, Kingspan said, adding that the group anticipates some improvement in operating performance during the summer months as part of the seasonal upswing.
"Medium-term, Kingspan remains exceptionally well positioned, both in product and geography, to deal with the opportunities and challenges which it is likely to encounter," the company concluded. (RD)