Kingspan and Grafton shares surge on trading momentum
Executive Chief Further Year Strong The Firm In Quarter Order Has Its Grown Gene Second Already Backlog The Said Murtagh Kingspan Of The
Shares in Irish building materials groups Kingspan and Grafton have surged on the back of them reporting strong trading momentum and growth through acquisition.
Environmental and insulation specialist Kingspan said its strong first-quarter trading levels have continued into the second three months of the year.
That has led it to forecast first half revenues of about €2.9bn, which would represent a 38% improvement on the first half of last year and a near 30% rise on the same period in 2019.
That was enough to trigger a more than 7% surge in its share price, which had been damaged last year through its involvement in the inquiry into the 2017 Grenfell Tower fire disaster in London, when one of its products was used without its knowledge in an already unsafe building system.
Even before June runs its full course, Kingspan said it now expects trading profit for the first half of 2021 to be in the region of €315m.
This would be up from €200m for the first half of 2020 and from €230m in 2019.
It said most of its key markets are “strongly ahead” of the first half of both last year and 2019.
Kingspan also said its already strong order backlog has grown further in the second quarter of the year.
Newly-completed acquisition European insulation provider Logstor, which Kingspan has bought for €253m, will add around €12m to second-half trading profits and analysts now expect Kingspan to generate total revenues of around €6bn for 2021 as a whole.
This would be up from revenues of €4.6bn last year.
The group has agreed to buy Finland-based company IKH for just shy of €200m.
Grafton will fund the acquisition from its existing cash resources and will pay for IKH in cash.
The acquisition is expected to complete next month.
IKH, which makes workwear, personal protective equipment, tools, spare parts, and accessories, had revenues of nearly €159m last year and profits of €21m. Grafton said the acquisition will be earnings enhancing from the date of completion.
“The acquisition of IKH is an exciting development that gives Grafton a presence in Finland for the first time and broadens its market position.
"It will also strengthen the group’s operations in the mainland European market in line with our international development strategy," said Grafton chief executive Gavin Slark.
"IKH is a high-quality business with a strong market position and an experienced management team that provides Grafton with a new growth platform in the Nordic region," he said.
In its last annual report, Grafton said that it would look to grow both organically and through acquisitions. Part of that strategy would see it moving into new territories.