Insulation industry news from Global Insulation

Denmark: Rockwool's profit rose by 34% year-on-year to Euro19m in the third quarter of 2015. Its operating profit fell from Euro51.5m to Euro31.9m and its turnover dropped from Euro580m to Euro571m. Rockwool has now downgraded its growth for 2015 to 1 – 2% and its profit to Euro147m.

CEO Jens Birgersson said that Rockwool's most important markets, Germany and France, were challenging, while there is positive development in the US and in Northern Europe. The company has invested Euro36.2m in a new ceiling board production plant in Mississippi, US. Rockwool is implementing a savings strategy aimed at making annual savings of Euro49.9m as of 2017.

UK: Superglass has reported a growing loss before taxation of Euro13.4m for its 2015 financial year that ended in 31 August 2015. Alongside this a fall in revenue of 11% year-on-year to Euro29.8m was noted. The drop was blamed on a planned reduction in Eastern European exports and a further deterioration in activity from government-sponsored schemes.

The UK-based glass wool manufacturer also confirmed Mark Cubitt as its chairman on a permanent basis. Cubitt was appointed interim chairman on 19 June 2015 following the resignation of John Colley.

Ireland: Kingspan has delivered a significantly better-than-expected full-year forecast, suggesting that its 2015 profits could increase by 68% to Euro250m, despite global economic confidence wavering. Insulated panels should show 53% revenue growth to Euro1.7bn in 2015.

Kingspan has reported a 44% year-on-year rise to Euro2bn in sales for the first nine months of 2015. The third quarter was particularly strong, with a 54% sales rise noted, which was boosted by the contribution of recent acquisitions. Sales in the UK, mainland Europe and the Americas, Kingspan's three main regional markets, soared by 54% in the first nine months of 2015. This performance was boosted by a 'solid' showing in the UK, 'steady' sales in Europe and strong growth in North America, particularly in the US.

US: Installed Building Products' (IBP) net revenue grew by 29.3% year-on-year to US$182m in the third quarter of 2015. Same-branch sales increased by 8.4%, attributable to higher volume, price gains and a more favourable project mix. Operating income increased by 43.2% to US$15.5m.

In July 2015, Installed Building Products acquired Stamford, Connecticut-based EcoLogic Energy Solutions, enhancing the company's presence in the Connecticut, New York and Northern New Jersey markets. In August 2015, it acquired New Jersey-based Eastern Contractor Services, operating as Parker Insulation and Building Products in Southeastern Texas, enhancing its presence in New Jersey, the New York metropolitan area and Texas.

"We successfully executed our growth-oriented business strategy in the third quarter of 2015, which continues to produce strong financial results," said Jeff Edwards, Chairman and CEO. "Revenues grew by US$41m, or 29.3%, for the 2015 third quarter as a result of a US$11.7m increase in organic revenues and a US$29.4m increase in revenues from recent acquisitions. The housing market continues to recover in 2015 driven by growth in housing permits, starts, and completions. During the third quarter of 2015, we continued to increase sales organically, above the pace of single-family completions. Acquisitions remain an important part of our business strategy and during 2015 we have acquired US$85m of annual revenues, which are quickly contributing to both revenues and earnings."

Bulgaria: Bulgarian insulation materials producer Hydroizomat said that its net loss rose to Euro613,600 in the first nine months of 2015 from Euro92,201 in the same period of 2014. Its operating loss jumped to Euro511,219 from Euro29,708 in the year-ago period. The company's total revenue plunged to Euro226,908 in the first nine months of 2015 from Euro482,499 in the same period of 2014.

US: Owens Corning's net sales increased by almost 6% year-on-year in the third quarter of 2015, led by an 11% increase in insulation sales.

Owens Corning reported US$1.46bn in net sales during the third quarter of 2015, up from US$1.38bn in the same period in 2014. This boosted its sales by 1.7% year-on-year in the first nine months of 2015. Sales of insulation composites and roofing all increased in the third quarter. Ownes Corning's net earnings in the third quarter of 2015 were US$112m, up from US$52m in 2014. Insulation earnings before income tax grew for a 17th consecutive quarter. Insulation sales jumped from US$454m in the third quarter of 2014 to US$502m in the third quarter of 2015, an 11% improvement. For the year, insulation sales have increased by 6%.

"Owens Corning had a very strong quarter, as all three businesses made substantial contributions to earnings," said Mike Thaman, Chairman and CEO. "Our businesses performed at double-digit margin levels as a result of positive macro trends and strong commercial and operational execution."

Owens Corning expects to benefit from continued improvement in the US housing market and global growth. Growth in new US residential construction should continue to help the insulation business, with revenue growth of about 10% in the second half of 2015.

Denmark: Rockwool International has posted its financial results for the first half of 2015. These show a marginal improvement in performance for the period compared to the same period of 2014.

Its sales came to Euro1.06bn, a 2.3% increase compared to the same period of 2014 with no significant overall effect from exchange rates. However, for the second quarter of 2015, net sales were 1.7% down compared to the second quarter of 2014.

The external sales of Rockwool's Insulation Segment reached Euro798.6m in the first half-year, which is slightly below 2014 but represents an increase of 1.0% based on comparable exchange rates. For the second quarter of 2015 external sales decreased by 1.0% compared to same period of 2014, mostly due to a negative exchange rate effect of 1.2%. Earnings before interest, tax, depreciation and amortisation (EBITDA) for the first half were Euro155.6m.

Sales prices have continued to be stable in most countries where Rockwool operates with the exception of France where sales prices decreased in a number of key segments. Input costs have were also reported to have been 'stable' in the first half of2015, with some positive effect from raw materials stemming from lower energy prices.

First half-year sales in Western Europe increased by 2.0% with only limited effect from exchange rates. The German and, to a lesser extent, the French insulation markets continued to be disappointing whereas most other European countries showed solid signs of recovery. For the second quarter of 2015 Western Europe increased 0.4% against the same period in 2014, with no impact from currencies.

Eastern European insulation sales decreased by 14.6% compared to the first half of 2014 and also decreased by 2.6% based on comparable exchange rates. While sales in Poland continued to perform well, the decrease was primarily due to lower sales in Russia where difficult market conditions continued to prevail. For the second quarter of 2015 sales decreased by 11.3% but by only 1.8% based on comparable rates, thanks to slightly more positive conditions in Russia.

In North America and Asia, the positive development of sales in the first quarter slowed. Sales increased by 21.7% compared to 2014 primarily due to a positive exchange rate effect as the increase at comparable exchange rates was 8.9%. The growth mainly comes from North America while sales in Asia decreased slightly. For the second quarter of 2015 sales increased by 20.7% but only 5.4% based on comparable rates.

Going forward, Rockwool expects that market conditions in Europe will continue to improve gradually in line with the development seen in most of the countries during the first half of 2015. It is also expected that trading conditions in Germany will improve in the coming quarters, even if it is unlikely that the delayed plan for new government incentives to stimulate energy renovation in buildings will be ready to benefit the German insulation market in 2015. Sales prices in Europe are expected to remain around their current level.

The instability in the Russian economy makes it difficult to predict how business conditions will develop, but Rockwool has maintained its forecast of a decline around 15%. It is not expected that sales price increases can offset the high inflation given the competitive situation in the Russian insulation market.

Despite a slower development in the second quarter, Rockwool says that it is still confident that sales in North America will register a double digit increase supported by good market conditions and increased interest in the properties of mineral wool. The green field factory in Mississippi remains on target to reach the end of its scheduled running-in period by end 2015.

Ireland: Kingspan has earmarked Euro20m for its initial expansion into Mexico, which it expects to enter in 2016 or 2017, according to chief executive Gene Murtagh. The greenfield expansion was confirmed by the group as it posted record first-half results, boosted by acquisitions and favourable foreign exchange movements.

Revenue rose by 39% to Euro1.24bn, while its trading profits jumped by 61% to Euro112m. Excluding currency benefits, revenue was 29% higher, while trading profits were up by 44% on the same basis. Kingspan reported that its overall performance was underpinned by strengthening UK and US markets, while there has also been recovery in other important markets for the group, such as the Netherlands.

Kingspan completed two significant acquisitions so far in 2015: the Euro320m purchase of Belgian group Joris Ide and the Euro139m purchase of Canada's Vicwest. The company also plans to install new insulated panel manufacturing capacity at plants in Belgium, France and Russia over the next two years.

Murtagh said that Kingspan has allocated Euro75 - 80m/yr for capital spending over the next four to five years, which includes the start-up costs for its entry to Mexico. "There were some bolt-on opportunities in Mexico but we haven't managed to unlock any of those, said Murtagh. "The investment at the start will be in the order of Euro20m. Naturally, over time that becomes larger as we expand the business."

Kingspan has also continued to eye opportunities in Brazil. "We haven't made any significant headway, but it's still very much in our thinking," added Murtagh. "Our ambition in Brazil would be to do it through an existing player and that just takes a bit of patience."

US: Installed Building Products (IBP) has announced strong results with growth in net revenue, adjusted earnings before income, taxes, depreciation and amortisation (EBITDA) and operating income for the second quarter of 2015, which ended on 30 June 2015.

For the second quarter of 2015, net revenue grew by 26.4% year-on-year to US$159.7m. On a same branch basis, net revenue improved by 10%, with approximately half of the growth attributable to an increase in the number of completed jobs and the remainder through price gains and a 'more favourable customer and product mix.' Gross profit improved by 33% to US$46.3m and gross margin expanded to 29% from 27.6%, primarily due to favourable leverage on higher net revenue and increased cost efficiencies. Adjusted EBITDA grew by 77.4%year-on-year to US$17.7m, largely due to higher net revenue and improvements in gross margin. Operating income grew by 148.5% to US$11.4m. Adjusted net income from continuing operations was US$7.2m compared to US$3.5m in the same quarter of 2014.

"The second quarter reflects further momentum of our business strategy, which produced another quarter of year-on-year growth in net revenue, same branch sales and profitability," said Jeff Edwards, chairman and CEO. "Our financial results are benefitting from continued improvements in the housing market, as well as the strong local market performance of our branches. Our core single family same branch sales outperformed the growth in single family residential completions during the second quarter and we expect this trend will continue. I am very pleased with our acquisition strategy, pipeline, integration and performance. IBP has built an exciting platform that offers a compelling option for local builders. During 2015, we have already acquired US$63m of annual revenues and these acquisitions are quickly contributing to both revenues and earnings. Our capital position remains strong and we have a robust pipeline of potential acquisitions for the remainder of 2015 and through 2016. We expect positive momentum to continue throughout the remainder of the year as we continue to benefit from improving residential end markets."

US: Owens Corning has reported that in the second quarter of 2015, its revenue rose by 4.4% to US$1.42bn. It expects to benefit in 2015 from sustained improvement in the US housing market and moderate global growth.

In the composites sector, the company now expects a full-year earnings before income and taxes (EBIT) improvement of about US$60m based on current volume and pricing strength, including the impact of US$25m in currency headwinds. In roofing, Owens Corning continues to expect that the full-year US shingle market will be in line with 2014. Based on the decline in first-half shipments, the market is expected to grow by the mid-single digits in the second half of 2015. Insulation should continue to benefit from growth in US residential new construction, improved pricing and operating leverage. The company has estimated an effective tax rate of 30 – 32% and a cash tax rate of 10 - 12% on adjusted pre-tax earnings, due to the company's US$2.2bn tax net operating loss carry-forward. Owens Corning expects general corporate expenses to be at the bottom of the range of US$120 – 130m in 2015 and capital expenditures of approximately US$380m. Interest expenses are expected to be about US$110m.