Kingspan Earnings: Sales Mix Shift Drives Profit Margin Improvement Amid Otherwise Challenging 2023

No-moat Kingspan released fourth-quarter 2023 results that tracked our expectations, delivering full-year 2023 EBITA of EUR 877 million, up 7% year on year on a constant-currency basis, largely aligning with our full-year forecast. In 2023, globally weakened construction activity and price deflation—as raw material prices declined—drove respective full-year sales declines of 9% and 8% for Kingspan’s insulation panels and insulation board segments. The two segments are Kingspan’s largest businesses, together accounting for about 85% of group EBIT. Notwithstanding, Kingspan’s profit margins firmed, with full-year 2023 EBITA margin increasing 80 basis points to 10.8%, as profit margins for the insulation panels segment, and Kingspan’s smaller light, air and water, roofing and waterproofing, and data and flooring segments widened. Of note, the insulation panel segment's profit margin benefited from positive sales mix shift—toward Kingspan’s more innovative insulation product range, including QuadCore, which now accounts for 18% of insulated panel volumes. Consequently, the insulation panel segment’s EBITA margin rose—by 1.6 percentage points year on year to 12.2%—despite the cyclical challenges presented by otherwise weak construction activity.