* Shares leap as investors see worst over
* 35 percent revenue fall, better than expectations
* No dividend payment for 2009, unlikely in 2010
(Adds analyst, trader quotes, details)
By Padraic Halpin
DUBLIN, Aug 24 (Reuters) - Irish building materials group Kingspan posted a better-than-expected 35 percent drop in first-half revenue and said demand for most of its products had stabilised, sending its shares up 15 percent.
Kingspan, the number one producer of insulation in Britain, Ireland, Canada and Australasia, said on Monday it suffered a market contraction not seen in the lifetime of the business for the period to June 30, but investors bet the worst was over.
Shares in the group were up over 15 percent to 6.22 euros by 1040 GMT despite the group being unable to give full-year guidance and Chief Executive Gene Murtagh saying profits would not improve for certain until 2011.
"They've basically reached the point of inflection where the worst is maybe behind them," one Dublin-based dealer said.
"It will be 2011 before you see any significant growth coming back in but investors are aware of that and are looking for good growth stories over a 5-year period. Kingspan fits that criteria."
Kingspan has repositioned itself to take advantage of growing energy efficiency agendas in developing countries and capitalise on the increase in regulatory standards within the construction sector.
Murtagh said he expected the first bounce to come from the slowly improving residential market in its biggest region, Britain, which accounted for 46 percent of first-half sales.
British house builder Bovis Homes confirmed a growing trend of stabilisation in the UK housing market on Monday, following similar sentiment from peers Bellway and Taylor Wimpey last week.
Like insulation rivals SIG, Kingspan also cut costs, shaving its annual fixed cost base by 60 million euros, 10 milllion better than guided when it announced a cost reduction programme earlier this year.
"You'll have extra costs to come out of the balance of this year and incremental benefits next year as well which is very good," Flor O'Donoghue, analyst at Davy Stockbrokers said.
DIVIDEND CUT
Revenues for the period fell 35 percent to 552.5 million euros, better than a figure close to 545 million predicted by four analysts surveyed by Reuters Estimates.
Kingspan, which makes construction industry supplies from raised access floors to timber frames also saw first-half operating profit fall 66 percent to 30.3 million euros and basic earnings per share drop 70 percent to 12.3 cents.
As a result, Murtagh, who did not predict when volumes might increase, said the group would not pay a dividend in 2009 and was unlikely to do so in 2010.
Kingspan paid shareholders 8 cents a share for the same period last year but decided against paying a full-year dividend in March to focus on cost and cash management.
"Certainly not (in H1) and to be quite honest as things stand right now, with the visibility we have got, it'll be unlikely in 2010 but we will judge that at the time," Murtagh told Reuters in an interview.
The group said that despite the stabilisation, visibility through 2010 in the broader construction sector was less certain with the level of planning applications internationally indicating an improvement was unlikely in the near term.
(Editing by Lin Noueihed)