Kingspan may push into east of Europe

Kingspan Group, one of the top performing shares on the Irish market last year, is gearing up for an expansion into eastern Europe…

Kingspan Group, one of the top performing shares on the Irish market last year, is gearing up for an expansion into eastern Europe and is understood to be planning a £8 million to £10 million acquisition of a Czech manufacturer of composite panels.The size of the acquisition is relatively modest when compared with some of Kingspan's recent deals -- particularly the £26 million acquisition of Ward Building Materials in Britain a year ago. But it will be seen as a major strategic move by the Cavan-based group, whose manufacturing operations are currently concentrated in Ireland and Britain.The acquisition of a manufacturing plant in a comparatively low cost location like the Czech Republic would allow Kingspan expand its operations in Europe, which are currently serviced from its Irish and British plants. Although sales to Europe have been growing strongly in recent years, the bulk of Kingspan's sales are still in Ireland and Britain - where the company has benefitted from the strength of the construction industries.Analysts are expecting Kingspan's sales to almost double to around £240 million in 1997 mainly due to the impact of acquisitions with pre-tax profits of around £30 million. With estimated end-1997 net debt of less than £20 million, gearing or around 40 per cent and interest charges covered an estimated 18 times, Kingspan is in strong shape to make acquisitions without troubling shareholders.Kingspan shares rose by over 130 per cent last year and the shares have continued their strong run into 1998, rising from 230p at the end of last year to 285p at yesterday's close.