Kingspan eyeing €600m acquisition spree

Kingspan eyeing €600m acquisition spree
Kingspan Chief Executive Gene Murtagh.

Specialist building products company Kingspan is eyeing more acquisitions in mainland Europe and could spend up to €600m on purchases this year.

The Cavan-headquartered building insulation company's chief executive Gene Murtagh said while the acquisition pipeline is "very healthy", the European market remains very unpredictable.

While the company has ample headroom for deal activity, he said "we could do lots [of deals] or nothing".

However, he confirmed that while the company branched into new markets in Latin America and India last year, any purchases made this year would likely be focused on continental Europe.

He was speaking on the back of a set of predictably strong annual results, showing Kingspan breached the €4bn revenue mark for the first time.

Revenue growth, to that €4.4bn mark, amounted to 19%, while trading profit jumped 18% to €445.2m and post-tax profits increased by 17% to €335.8m. Earnings, on an Ebitda basis, broke the €500m mark for the first time.

Unsurprisingly, Kingspan's 2018 growth was driven by its core insulated panels division, which grew revenue and profits by over 20%.

Geographically, mainland Europe and the Americas were the company's strong points. Kingspan's Ireland division also benefited from continued growth in new commercial property builds.

Kingspan also weathered much of last year's Brexit uncertainty, with insulated panel sales volumes in the UK strengthening towards the end of the year, meaning full year-on-year output was in line with 2017 levels.

Mr Murtagh said the company's project pipeline in the UK remains "in reasonable shape" but there have been order postponements and more are expected in the near-term as developer confidence wanes as uncertainty grows over the Brexit outcome.

A quarter of Kingspan's revenues are derived from its UK business, but the company is awaiting more clarity on Brexit before taking any concrete action over its future in the UK.

Mr Murtagh said it is still too early to suggest what effect Brexit could have on Kingspan, but said the debate has gone on too long and clarity, one way or the other, is needed.

Kingspan has around 20 manufacturing facilities in the UK, employing approximately 2,500 people.

Mr Murtagh said those facilities and jobs are secure. He said he still expects an orderly Brexit - a no-deal being "unthinkable" - and that there remains a considerable pent-up demand for building activity in the UK.

Kingspan eyeing €600m acquisition spree

"Performance has been robust in most of our major markets, and momentum has improved through the year.

"With the order book going into the new financial year ahead of the prior year period, we are confident in our near-term outlook.

"Notwithstanding this, we remain mindful of challenges to growth, particularly the continuing uncertainty in the UK," Mr Murtagh said.

However, the geographical diversification of the business, helped by our acquisitions last year to expand our footprint in Latin America, southern Europe and India, means we are well-placed to continue to deliver long-term returns to shareholders.

Mr Murtagh said the first quarter of this year will be positive for Kingspan, with trade likely weakening in the second quarter. Kingspan shares - up 7% in the past 12 months - were up by just over 1% yesterday.

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