Building materials giant, the Kingspan Group has said the first quarter of 2009 has been predictably tough, characterised by widespread reluctance from customers to commit to newbuild construction projects.

Issuing its latest Interim Management Statement, the group said sales have declined by 34% to €350m compared to the same period last year, and by 39% excluding acquisitions.

Kingspan said this expected contraction in new building activity was partly offset by improving thermal standards - described as an "encouraging trend in the residential refurbishment market" - and timely action to reduce costs and working capital at all levels throughout the organisation.

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"The weakness in sales activity was most pronounced in the UK and Ireland, where sales into the non-residential sector suffered most," the report said.

According to the group, order intake for Insulated Panels in UK, Ireland and Western Europe was down 43% in the four months, whilst the month of April was down 38% reflecting a marginal improvement.

Insulation Boards sales were down 32% in the first four months of 2009, which Kingspan said was ahead of general market conditions, and achieved through an improved mix of sales and a solid refurbishment market.

Off-site sales were down 70% due to the downturn in the Irish and UK new residential construction markets, which may well have reached its lowest point early this year, according to the report.

A spokesman said: "As expected, the first four months have proven to be deeply challenging, and although the typical mid-year seasonal upswing is likely to be less evident than in the past, the Group anticipates some improvement in operating performance during the summer months.

"Medium term, Kingspan remains exceptionally well positioned, both in product and geography, to deal with the opportunities and challenges which it is likely to encounter," he added.

(PR/JM)