Business Irish

Tuesday 16 October 2018

Acquisitions pay dividends as profits rise by double-digits at Kingspan

However group warns on ‘Brexit quagmire’

Gene Murtagh, CEO of Kingspan
Gene Murtagh, CEO of Kingspan
Ellie Donnelly

Ellie Donnelly

Cavan-based insulation giant Kingspan has seen its profit increase by 11pc year-on-year to €377.5m in the 12 months to 31 December 2017.

The strong performance, which saw the group’s revenue jump 18pc to €3.7bn, was driven by acquisitions, which contributed 9pc and 8pc to sale and profit growth respectively, according to the group’s preliminary results for 2017.

In addition Kingspan’s insulated panels business recorded sales growth of 17pc, driven by a ‘positive’ performance in continental Europe and a ‘solid outcome’ in North America, which compensated for the sharp slowdown in the UK towards year end.

The group’s insulation board recorded sales growth of 12pc, owing to what the group said was significant price inflation and the structural shift to Kooltherm in the UK, Ireland and mainland Europe.

Earning at the group before interest, taxation, depreciation, and amortisation were €442m, a 9pc increase year-on-year.

"2017 was another year of strong performance for Kingspan. We have continued our globalisation strategy with several significant acquisitions, including establishing a market leading presence in Latin America,” Gene Murtagh, chief executive of Kingspan, said.

“The challenge of increased input costs has been effectively managed to minimise the impact on profit margins. Notwithstanding the weakening UK market our well diversified business is well placed for the longer term".

Referring to the Irish market specifically, the group said its insulated panels market had progress well in recent years as the economy recovers and growth in building resumes. Although it said that the non-residential sector was broadly flat year on year.

Brexit

In the UK, the year started well for its insulated panels business, however it tapered off “considerably” towards year-end as a decreasing number of large scale non-residential projects came to the market.

The group’s QuadCore panels business reached penetration of 15pc in its second full year in the UK. While its insulated boards division had an “outstanding” year in the UK, with revenue ahead by 12pc.

The group noted in its results that its UK business was moving into a more difficult phase, with general confidence ebbing, and inward investment waning, as the British government “wades its way through its Brexit quagmire.”

“Once certainty is restored, whenever that may be, demand should recover.”

Acquisitions

Earlier this year the group announced that it had paid $10m (€8.1m) to buy a minority stake in US software firm Invicara, in what the group said marks a strategic investment.

Invicara has a cloud-based platform that creates a data-rich 'digital twin' of a building. It integrates its system with building information modelling (BIM) to generate the digital mirror.

According to Invicara, that creates efficiencies in design and construction, and enables deeper collaboration between developers, architects, engineers and contractors.

Last year the group made a number of acquisitions, including that of a Dutch company (Brakel) that specialises in large-scale glazing solutions as well as ventilation and fire-safety systems in December.

While in the first half of 2017, Kingspan paid €40m to buy US-based CPI Daylighting. In June, it bought a German firm in operating in the sector, having previously bought Essman for €80m.

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