Insulation maker Kingspan reluctant to cut prices just yet
19/08/2022 11:24
DUBLIN, Aug 19 (Reuters) - Building insulation specialist
Kingspan KSP.I said it plans to maintain higher sales prices
for the time being in order to protect itself from any further
surprise rises in raw material costs, even if it means a
continued decline in sale volumes.
The Irish firm, which on Friday reported a 32% rise in first
half trading profit after revenue topped 4 billion euros, had
warned recently that order intake volumes had fallen
significantly year on year in May and June. urn:newsml:reuters.com:*:nL1N2Y70A7
Chief Financial Officer Geoff Doherty told an analyst call
that volumes were down around 5% to 10% in July and August but
that he expected underlying revenue to rise by 10% in the second
half due to prices being higher than a year ago.
Shares in the group, which fell sharply in June when it
warned of the dip in orders, were 8.4% higher at 62.3 euros by
1000 GMT. Goodbody Stockbrokers analyst David O'Brien said the
tone around orderbooks on Friday was "incrementally comforting".
While inflation in two of Kingspan's three key raw materials
- steel and chemicals - has eased in recent months, CEO Gene
Murtagh said the level of unpredictability meant it could not
yet pass the lower costs on as it always has in the past.
"Materials could go way down, materials could turn and go
way up and actually I haven't got a clue what the outturn is
going to be. It could be either," Murtagh told analysts.
"The easiest thing in the world is to drop the price and
pick up the volume. We're running a very conscious strategy of
protecting price and margin in the face of unpredictability."
Kingspan, which has 198 manufacturing sites in more than 70
countries around the world, said the building industry is likely
to contract in many parts of the world in the near term but that
it was confident in the long-term demand for its energy
efficient products.
(Reporting by Padraic Halpin; Editing by Kirsten Donovan)
((padraic.halpin@thomsonreuters.com; +353 1 500 1504; Reuters
Messaging: padraic.halpin.thomsonreuters.com@reuters.net))