Kingspan ‘ready’ to conduct big acquisitions

Cavan-headquartered specialist building materials group Kingspan is “ready to do something big” on the acquisition front, its chief executive Gene Murtagh said yesterday.

Mr Murtagh was speaking on the back of the environmental and insulation-focused materials company’s first half results which showed strong revenue and profit growth.

“Our balance sheet is strong and ready to support our development agenda as the opportunities unfold,” he said.

Kingspan has around €706m available for more acquisitions and Mr Murtagh said it has a healthy pipeline of potential deals, which could well prove to be sizeable transactions rather than merely bolt-on buys.

To date this year Kingspan has invested €64m — €50m going on internal capital projects and €14m on acquisitions. Its first in South America — a 51% stake of Colombian company Panelmet — has recently been followed up by one in Australia and by the €40m purchase of US company CPI Daylighting. Management is eyeing further growth in Latin America.

Kingspan yesterday reported a better-than-expected set of financial figures for the first six months of the year. Group revenues rose 19%, year-on-year, to €1.75bn, while trading profit saw an annualised increase of 6% to reach €177.8m. Acquisitions contributed 10% to sales growth and 6% to trading profit growth in the period. Basic earnings per share grew by 5% to 74.4c and the company upped its interim dividend per share by 10% to 11c.

Over 20% up since the turn of the year, Kingspan’s share price rose nearly 10% in Dublin trading yesterday.

Mr Murtagh said the group is making “encouraging” progress in the early part of the second half of the year.

“The first six months of 2017 were strong. We expect end-market activity to be broadly positive for the remainder of the year and, at current exchange rates, to deliver a full-year result at least in line with consensus,” he added.

Analyst reaction to the results was broadly positive, too, with upgraded forecasts likely.

Goodbody Stockbrokers said the figures were impressive considering market headwinds caused by input price inflation. Davy Stockbrokers said it expected to up its full-year forecasts for the company.

“Kingspan remains a force to be reckoned with. The pace of trading profit growth may have eased in the first half of 2017 but the group is clearly successfully navigating its way through a very challenging input environment. Indeed, we expect to raise our full-year trading profit forecast by around €10m, towards €377m, despite an increasing foreign exchange headwind,” it said.

Kingspan saw solid performances across each of its key geographical regions, including Ireland, in the first half and revenue growth in each of its divisions.

The core insulated panels arm grew revenue by 17%, year-on-year, to just over €1.1bn, while trading profit increased by 4% to nearly €117m.

The new ‘light and air’ division — a breakaway from the insulated panels arm, focusing on efficient daylighting and smoke management of buildings — generated revenues of €81.7m in its first period as a stand-alone division. Kingspan is aiming for annual revenues of €500m from the division within five years.


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