20th Jun 2022 13:02
(Alliance News) - Kingspan Group PLC's stock faced hefty selling pressure on Monday, after it warned that order volumes have slowed in recent weeks, though it managed to achieve a "record" first half of 2022.
Kingspan shares were 9.5% lower at EUR61.54 each in London on Monday afternoon.
"We have seen the mood in most end-markets deteriorate over the last two months with order intake volume down significantly on the May and June period in 2021 although ahead versus the same period in 2019," the Kingscourt, Ireland-based building materials company cautioned.
The slowdown is particularly evident in Kingspan's Insulated Panels offering. The order backlog there is down 2% yearly as of the end of May, having been 19% higher at the end of March.
Analysts at Davy commented: "Recent trading has seen evidence of a significant slowdown in the company's end markets and, due to this, we are unlikely to upgrade our full-year estimates.
"Recent trading comments refer to a deterioration in mood across end markets and order intake has been down significantly year-on-year in the last couple of months."
Analysts at Shore Capital Markets said they understand the declines in Kingspan's markets to be across the board.
"We understand this is across all of Kingspan's five operating segments and across all geographies, suggesting a broad-based economic slowdown in Europe, US and UK. We note that Kingspan generates just 16% of revenues in the UK market," Shore said.
Despite the recent slowdown, Kingspan expects trading profit for the first half of 2022 to be in the region of EUR415 million, up 26% from EUR329 million a year before. This is a "record" high for the company, it noted.
Looking forward, it said: "Kingspan is positioned strongly overall for the medium term and beyond given the global focus on energy efficiency, our high performance product suite, our distinctive planet passionate agenda and diversity of our end markets."
Shore rates Kingspan at 'buy'. It boosted the stock from 'hold' in January, after a "Grenfell-related" share price slide. The stock is down 20% over the past 12 months.
Building cladding has been under scrutiny since the Grenfell Tower fire in London back in 2017. The blaze, which was started by a faulty fridge in an apartment, was fed by the tower's flammable cladding panels, killing 72 people.
Kingspan manufactured the flammable Kooltherm K15 insulation used on the Grenfell Tower. Kooltherm K15 was the minority material used on the tower. Most of the insulation came from another firm, Celotex.
Davy, meanwhile, rates Kingspan at 'outperform'.
By Eric Cunha; [email protected]
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