Kingspan: Demand Conditions Are Improving, Pointing to Cyclical Earnings Relief in 2025

Glimpses of cyclical earnings relief were apparent in Kingspan’s November trading update, leading us to upgrade our near-term estimates for the no-moat company. Sales in the first nine months of 2024 fell 2% for Kingspan’s insulation panels division—which accounts for approximately 65% of group operating profit—implying sequential improvement in volume during the third quarter. The insulation boards segment also exhibited sequential improvement, with organic sales falling 10% in the third quarter and comparing favorably with the approximately 16% organic decline in the prior quarter. Ostensibly, demand conditions in global thermal insulation markets are turning a corner, responding somewhat faster than we’d anticipated to the easing of financial conditions in recent months.