Cavan's Kingspan could repeat €500m spend

Kingspan has the capacity to spend another €500m on acquisitions this year, after seeing a similar spend contribute to a record group performance in 2015.

The Cavan-headquartered international specialist building materials firm yesterday reported a 47% jump in annual revenues, to just under €2.8bn, with post-tax profits up by 79% to €190.6m and earnings per share climbing 70% to 106.7c.

Trading profit was ahead 72% at €256m and the company’s full-year dividend amounts to 25c per share; 54% ahead of 2014 levels.

The core insulated panels business saw 60% revenue growth, to nearly €1.8bn and an 85% jump in trading profit to €165.2m.

Acquisitions contributed €654m to group revenue, but strong organic growth was also seen in North America, the UK, Turkey, and the Middle East, while sales volume growth of 10% was noted in Ireland.

Kingspan spent €490.5m on acquisitons last year.

That spend was dominated by the significant boost to its insulated panels arm via the €138.3m purchase of North American firm Vicwest Building Products and the €320.4m takeover of Belgian player, Joris Ide, which was Kingspan’s largest ever single acquisition.

Kingspan chief executive, Gene Murtagh said the two additions have performed ahead of expectations and that another €500m, at least, could be spent on purchases this year without damaging the group’s balance sheet.

Kingspan’s net debt currently stands at €328m and is just over one times ebitda and comfortably under management’s ceiling of two times earnings.

Mr Murtagh said the company has a “healthy pipeline” of acquisition targets and is willing to growth further, this way, in its core European and North American markets. However, it still harbours longer term ambitions to grow into Asia and South America.

Kingspan will still spend around €80m per annum over the next couple of years on organic growth too. This spend will go on a mix of refurbishing existing facilities and opening new ones across Europe, North America, and Australia.

Management said that despite recent acquisitions, Kingspan’s core model remains grounded in organic growth.

In terms of outlook, management said “a strong start” has been made to 2016, helped by a strong order book and a mild winter season.

Asked about the prospect of the UK leaving the EU, Mr Murtagh said it remains to be seen, but suggested that if ‘Brexit’ is positive for the UK it will be positive for Kingspan.

The company’s share price — down 4% this year so far —was up by over 2.1% yesterday at €23.84.


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