Wednesday 29 January 2020

Kingspan eyes deals in India, Latin America, as sales surge

Kingspan chief executive Gene Murtagh
Kingspan chief executive Gene Murtagh
Donal O'Donovan

Donal O'Donovan

Kingspan is eyeing acquisitions in India and Latin America as the Irish building materials group looks to diversify further into new high growth markets.

Shares surged 7.3pc yesterday after Cavan-based Kingspan reported a 19pc rise in its global sales in the first six months of 2016, taking revenue to €1.47bn.

Profits were up 50pc to €167.3m in the same period, the company said in its first half financial results, bolstered by strong North America and European growth and a big increase in margins.

Ireland was Kingspan's fastest growing market in the period - with sales up almost 50pc to €59.5m from €40.4m at the same stage in 2015, the company said.

Chief executive Gene Murtagh said that sales to the Irish construction sector are still as much as 60pc to 70pc below peak levels, but that the market here has seen continuous improvement since 2010. Ireland is now a relatively small market for Kingspan.

The overall results reflected the strongest ever six months period for the company, he said.

The UK, with sales of €410m in the first six months of the year is Kingspan's biggest single market.

Despite warnings that June's Brexit vote would dampen demand from the construction sector, Gene Murtagh said there is no evidence so far of a slowdown there.

Since the June 23 vote, Kingspan's UK order book has increased by 7pc, the company said. "There was a foregone conclusion about the impact of Brexit, but we can only track the facts and our business has performed well (since the vote)," he said. Big swings in the value of sterling before and since the UK vote to leave the European Union have had an impact however, he said.

Every 1pc move in sterling versus the euro has an impact of around €1.5m on Kingspan, he said. But he described the impact so far of the UK vote as "nothing compared to 2009."

Kingspan is a leading maker of insulation and architectural products for the construction sector. The company has expanded across the UK, continental Europe and North America.

It is now looking to expand into India and Latin America, eyeing takeover deals to break into new markets, Mr Murtagh told the Irish Independent.

"The preference is to acquire and convert businesses (to the Kingspan model)," he said.

The company can take €500m of acquisitions a year "in its stride" and would look at potentially bigger deals, he said.

Shares closed up just over 7pc at €24.395 each.

Irish Independent

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