Saturday 22 July 2017

Kingspan has €150m to spend as revenue rises to €1.19bn

John Mulligan

John Mulligan

Kingspan chief executive Gene Murtagh said the company retained the financial firepower to comfortably make an acquisition worth between €100m to €150m during 2011, as the Cavan-based firm reported its first rise in revenue and operating profit in three years, in 2010.

Releasing full-year results yesterday, Kingspan said that revenue at the insulation firm climbed 6pc to €1.19bn, while operating profit rose 8pc to €67.4m for the year. Much of the revenue increase was attributable to euro weakness, however.

Speaking to the Irish Independent, Mr Murtagh said that he was reasonably confident the company had seen the bottom of the market.

"We won't know we've seen the bottom until we've passed it, but the sense is that we have. There are certainly still some obstacles out there though."

The results, with adjusted earnings per share 20pc higher at 30.9 cent, were ahead of analyst expectations.

The UK accounts for 43pc of Kingspan's business, and Mr Murtagh said the retail sector has remained reasonably strong there. Clients include Tesco, Aldi and Lidl. The public sector accounts for about 15pc of UK sales and Mr Murtagh said that segment was under pressure as the government cut spending.

Projects

In its insulated panels segment, which accounts for 54pc of group sales and is primarily focused on commercial projects, revenue was up 8pc to €638m. Sales at its insulation boards division, which includes residential products, were up 15pc to €248.2m. Revenue at the group's access flooring unit fell 9pc to €134.8m.

Mr Murtagh added that the company was pushing through price increases up until early summer as the cost of its input materials began to rise.

"We buy €600m of materials a year and 60pc of that is steel and 40pc chemicals," explained Mr Murtagh. "Unusually, the costs of both are going up."

He said that by June, the cost of the steel it bought would have risen, on average, by about 15pc in six months while in the same period its chemical costs would be 25pc higher.

However, Mr Murtagh said that oil price rises were good for the group as they encouraged increased use of insulation products to conserve energy.

Kingspan, which has cut 2,000 jobs, recently agreed to pay €120m to buy the European insulation business that belonged to Irish firm CRH.

Shares in the company closed at €7, up 36 cent.

Irish Independent

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