Kingspan shares slip after profit miss, outlook cautious

Investing.com -- Shares of Kingspan Group Plc  (LON:0KGP ) were down earlier in the day following its first half results, which posted a mild profit miss. 

The company's trading profit came in approximately 5% below VA consensus expectations, with a year-on-year (YoY) decline of 3%, underperforming the previously provided guidance of a "broadly similar" profit YoY for 1H24, said analysts at Jefferies. 

The miss, although not entirely unexpected given the slow start to the first quarter, has prompted analysts to suggest that consensus estimates might see slight downward revisions. 

With the company's qualitative outlook already largely factored into current market expectations, there remains room for a low single-digit reduction in consensus to account for the 1H24 underperformance.

Underlying sales trends have shown progress, with 1H24 sales down 5% YoY, an improvement from the 8% YoY decline observed in 1Q24.

Despite the positive sales figures, Kingspan's H1 trading profit fell short of expectations, coming in at €422 million, a 3% miss versus J.P. Morgan's estimate of €437 million. 

This miss is significant given that the company's prior guidance indicated that H1 trading profit would be broadly similar to H2 2023, which was €436 million. 

The company's outlook for the second half of the year is optimistic, with management anticipating a "better performance" and trading profit growth for the full year, which consensus currently estimates at approximately +6% YoY.

While Kingspan's order intake in its Panels segment is reported to be "well ahead" YoY, this positive note is seen as a reiteration of the company's message from 1Q24 rather than new information, which has offered only limited reassurance.

 

Source: Investing.com