Vacant houses are all in wrong place, says Kingspan boss
Published 28/02/2012 | 05:00
Ireland's vacant houses are in the wrong place and demolishing them should be considered,Gene Murtagh, the chief executive of Cavan-based insulation maker Kingspan, said yesterday.
He claimed a "tipping point" has already been reached where there aren't enough houses in areas where demand exists.
"There's no point in saying there are 1,000 empty homes in the Midlands when they're needed in Dublin, for instance," he told the Irish Independent yesterday. Economists such as Peter Bacon have also advocated the demolition of ghost housing estates.
Mr Murtagh was speaking as his company beat market expectations and reported a 30pc rise in revenue to €1.54bn for 2011 and a 33pc jump in trading profit to €95.7m. That included the impact of acquisitions, but even without those the figures were up 14pc and 25pc respectively. Operating profit was 35pc higher at €91m.
It is the third year in a row that Kingspan has reported profit growth despite headwinds in many of its markets.
Kingspan's products are used in residential and commercial projects across Europe and in the US and Australasia.
The UK accounts for 39pc of overall sales and mainland Europe a further 38pc. Just 5pc of sales are generated in Ireland.
Mr Murtagh conceded that stagnant mortgage lending, the unwillingness of developers to re-engage in construction and pent-up demand could logically lead to conditions that would be conducive towards another property bubble once economic conditions improve.
"House construction needs to be demand-led. It's the only way it's going to be sustainable," he said.
Kingspan's insulated panels division reported a 19pc rise in turnover last year to €758m, with trading profit up 41pc at €50.5m. Those panels are mostly used in commercial schemes. In the UK, continued activity in the retail and food sectors, as well as refurbishment, has buoyed growth there with sales volume up 10pc during 2011. There was also a strong performance in Germany and Turkey.
In Ireland, sales volume grew 13pc off low levels, but order intake was marginally ahead of the prior year.
Kingspan's insulation boards unit saw sales volumes dip 2pc in the UK, although it performed better elsewhere in western Europe.
Sales at the division climbed 85pc to €460.4m and trading profit grew 54pc to €25.7m. Overall sales were also helped by Kingspan's acquisition last year of CRH's Insulation Europe subsidiary.
Revenue at its environmental division advanced 18pc to €202m, helped by sales in mainland Europe.
Mr Murtagh also said Kingspan's steel and chemical prices -- the two largest components of its main products -- were likely to increase 15pc in the second quarter.
Bloxham Stockbrokers yesterday raised its operating profit forecasts for Kingspan by 4pc for 2012 to €100.4m following last year's performance.
Shares in Kingspan closed up 0.8pc at €8.05.