Irish building products outfit Kingspan (KGP) fell 2.5% to €47.40 as a third quarter trading update revealed slowing sales.

The insulation specialist reported that for the nine months to 30 September 2019, sales rose 8% to €3.43bn on-year, but growth slowed to just 2% in the third quarter.

 

Looking ahead, fragile end-markets and deterioration in sentiment in some markets - most notably in the UK - would likely influence sales activity into the first quarter of 2020, Kingspan said.

'We expect to deliver full year trading profit of €490m, or growth of approximately 10% versus 2018, and in line with consensus,' it adds.

The company also says it is ‘conscious much of the seasonally variable fourth quarter is still at play’.

AJ Bell investment director Russ Mould says: ‘Today’s update from building materials firm Kingspan looks like the company might be trying to soften up the market for a potential mild profit warning.

‘The company’s leading position in high-performance insulation and link to the energy-efficiency theme has been a big driver of growth and made it a favourite with green funds.

‘The company actually has exposure to the entire "building envelope" – including the floor, roof, windows and doors which form the physical separation between the interior and exterior of a building.

‘However, this niche focus doesn’t entirely insulate it from a slowing economy and the impact this has on the construction sector.’

Mould notes that even if the company hits its full year guidance, the level of profit growth would still be down materially from the average over recent years.

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Issue Date: 18 Nov 2019