Revenue at Kingspan tops €4bn for the first time
“Every warehouse” in the UK is full with just five weeks to go until Brexit, according to Gene Murtagh, the chief executive of Irish insulation giant Kingspan.
He also said that he expects office construction starts in the UK to tumble by more than 10pc this year, with a deeper decrease in 2020.
He made the comments as Kingspan reported a strong 2018, with record revenues of almost €4.4bn, up 19pc on 2017. The underlying rise was 5pc.
Its trading profit jumped 18pc to €445.2m. The underlying increase was 7pc.
The Cavan-based group was bolstered by organic growth and acquisitions during 2018, and has expanded its geographic footprint. The company spent €470m on acquisitions last year and has the financial capacity to spend between €500m and €600m this year if it sees the right opportunities.
Mr Murtagh said that 2018 had been a “very positive year” for the group.
The UK accounted for 21pc of its revenue last year compared to 25pc in 2017. Mainland Europe accounted for 48pc last year compared to 44pc in 2017.
“On the whole it’s going to be trending down, for very obvious reasons,” said Mr Murtagh of the UK market.
“There’s a lot of pressure around warehouses – on the positive. Pretty much every warehouse in the country is full, so that side of the business actually has been reasonably stable and the pipeline is looking positive. A lot of that will depend on what the outcome of the on-going negotiations are.”
He added: “Residential is clearly going to see a downturn. In terms of office, actual office construction now is reasonably healthy, but that’s completion of projects that were underway over the last year or two. As we look ahead, we do expect in excess of a 10pc reduction in office starts this year and that will probably decrease further into next year. Again, this is all just a present view of life. A lot of that depends on where the whole thing ends up.”
Noting that the company remains "mindful" of challenges to its growth, "particularly the continuing uncertainty in the UK," Mr Murtagh said the geographical diversification of the business, helped by its acquisitions last year to expand its footprint in Latin America, Southern Europe and India, means it is "well placed" to continue to deliver long-term returns to shareholders.
Looking at the individual divisions, and the company experienced growth of 21pc in the insulated panels business.
This was aided by strong activity in the Americas, a positive performance in Continental Europe and a solid UK outturn against a "difficult" backdrop.
Kingspan also noted the "good" contribution from acquisitions in Europe and Latin America.
The group’s insulated boards arm reported sales growth of 12pc, reflecting a positive outturn in the Iberian acquisition, ongoing advancement of Kooltherm and solid underlying markets overall.
Meanwhile its light and air arm reported sales approaching €300m, with improved margins in Europe offsetting softer US margin, strong order intake overall in the US and a planned new facility in France to service Europe and the Middle East.