Kingspan seeks greater US return

Kingspan is looking to double its revenue contribution from North America in the next five years.

Currently around 60% of the Cavan-based specialist building material group’s annual revenues come from its operations in the UK, North America and Australasia. Of that, approximately 13% is contributed by the North American division.

Speaking yesterday on the back of a strong set of first-half financial results, Kingspan chief executive, Gene Murtagh said that the board would like to nearly double that figure to around 25% within five years.

Last week saw Kingspan announce a €61m deal to buy the building insulation division of US firm, Pactiv — giving the Cavan business a firm foothold in the American residential housing market.

Further acquisitions in the US are expected.

Mr Murtagh yesterday reiterated that Kingspan has room to spend more than €400m on further acquisitions without harming its balance sheet. North America, Brazil and mainland Europe remain its geographical regions of interest.

Despite an expected weakening in the second quarter, yesterday’s results showed a strong first-half performance from Kingspan — with group revenue up 4% year-on-year to €889.3m; trading profit ahead by 24% to €69.2m and basic earnings per share ahead by 27% to 29.2c. First half net debt was reduced by over €50m to €113.4m and the interim dividend was raised by 14% to 6.25c per share.

While some stagnation was seen in the Benelux countries, and Germany has begun to weaken, the group saw stability in North America, where it has been picking up market share of late, and there was also good growth in Australasia and the UK.

Even in Ireland, which nowadays makes up around 5% of overall revenues, a continued improvement was noted, with both sales volume and order intake growing substantially on an annualised basis.

The main insulated panels business grew sales by 9% in the first half, with profit up by 30%. The insulation boards unit also saw strong profit growth and marginal sales growth, with the access floors division the only one to see a decline.

While it foresees slow economic recovery and a continued easing of building activity for the rest of 2014, a good backlog of orders has led to optimism for the current full-year, while management remains buoyant about its longer-term prospects.