Rockwool nears construction on Indian insulation factory

Denmark-based insulation maker Rockwool International (Copenhagen:ROCK-B) expects its Indian factory to begin shipping insulation for the process industry by the end of 2010.

Thomas Nordli, senior consultant for group communications at Rockwool, told the Cleantech Group that construction is expected to start within the next few months in Dahej, India.

However, a factory planned for Russia is still on the books with no specific timeline thanks to the financial crisis, which halted the country’s booming demand, Nordli said.

The slowdown was reflected in the Danish firm’s newly released third-quarter results, which showed a 21 percent decline in sales through the third quarter of this year thanks to the stagnation in the new construction market. Rockwool recorded nearly DKK 8 billion ($1.6 billion) in sales in the first nine months of 2009.

But investors saw a silver lining today after the 3Q09 report, sending the firm’s shares up 2.15 percent to close at DKK 522 today on the NasdaqOMX Nordic Exchange Copenhagen.

The reason for the optimism could be that the recession has spurred growth in some business sectors for the €1.8 billion-per-year company, Nordli said.

Rockwool manufactures and sells stone wool insulation, which is made by melting volcanic rock and spinning it quickly on a wheel to create intertwined fibers. Stone wool can serve to insulate temperatures or noise, and it can withstand temperatures up to 1000 degrees Celsius, providing fire resistance.

Although the process requires extremely high temperatures, the insulation can be very efficient. Nordli said it takes just a few weeks for a Rockwool-insulated building to save enough energy to make up for the insulation’s carbon footprint.

“In its lifetime, the insulation will save more than 100 times the energy used for production,” Nordli said.

Sales of the insulation to newly constructed homes and commercial buildings may have slowed, but customers are paying more attention to how they spend their money, Nordli said. In addition, the larger EU countries have established incentive programs to improve the energy efficiency of existing buildings, according to the 3Q09 report.

“We were not as hard hit as others in the building industry,” Nordli said. “Renovation is going to pull us out of the crisis.”

Another growth area has been indirectly caused by rising gasoline and diesel prices, which have pushed more people to use public transit, especially in Europe, Nordli said.

The noise pollution caused by high-speed trains can aggravate nearby residents, prompting some sales of Rockwool’s acoustic insulation, which can reduce noise by 55 decibels. In addition, Rockwell has been selling the insulation to transit providers in Spain and France to place under train tracks to reduce the noise, he said.

“It’s our youngest and smallest business,” Nordli told the Cleatech Group. “But it’s a small area that’s seen growth because of environmental concerns.”

The company is also working to incorporate recycled metals in its insulation to displace virgin rock, Nordli said, despite the fact that there are ample supplies of volcanic rock.

Rockwool’s biggest competitor is Saint-Gobain, the world’s largest seller of insulation. But Nordli said the company isn’t too phased by the economic downturn because it’s focused on long-term growth.

That comfort comes from the long-term strategy of Rockwool’s largest shareholder, Rockwool Foundation, which holds more than 25 percent of Rockwool’s shares, Nordli said.

Rockwool also reported DKK 340 million in earnings before interest and tax in the first nine months of the year, down DKK 836 million compared to the same period in 2008.

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