Kingspan to cut back on acquisitions

Insulation manufacturer Kingspan will pull back from the acquisitions trail this year while it focuses on completing two recent deals worth more than €400 million, according to its chief executive, Gene Murtagh.

The group’s shares surged by more than 7 per cent to close at €17.685 after it reported a 16 per cent increase in annual earnings to €189.3 million on the back of strong sales in the British and US markets in 2014.

Its trading surplus grew 21 per cent to €148.5 million last year from €122.8 million in 2013 while its after tax profit for 2014 jumped 20 per cent, to €106.5 million from €89.1 million. Kingspan is proposing to pay shareholders a total dividend for the year of 16.25 cent a share, a 16 per cent increase in last year. It is proposing a final dividend of 10 cent.

Last month, the Cavan- based manufacturer announced that it had agreed to pay €315 million for Belgian rival Joris Ide. In November, it said it was buying the building products division of Canadian group Vicwest, for Can$154 million (€109 million).

Both deals are subject to approval by European and Canadian competition regulators. Mr Murtagh said on Monday it was now going through a “rigorous process” with these authorities. Kingspan is hopeful that on completion, it will focus on integrating them into the group as a whole.

“I would say that we are done with large-scale acquisitions for the time being,” he noted. “There is a lot of integration involved in those two transactions, that will be our priority.”

The group plans to spend about €50 million to €60 million this year on regular capital projects, including the construction of a manufacturing plant in Melbourne, Australia.

It completed three purchases worth a combined €114.4 million last year. Two were in the US, architectural facade manufacturer Dri-Design and foam board producer Pactiv Insulation. The third was in PAL Insulation in Dubai.

Kingspan has businesses in Europe, north America, the Middle East and Australia. It has also taken some initial steps into markets such as Africa and Brazil. In terms of the Irish market, it said volumes were still relatively low by historic comparison, albeit with a significant growth in activity in 2014.

"This momentum is likely to continue as Ireland gradually rebuilds itself and the overhang from the boom years gets absorbed, giving way to further new-build opportunity," it said.

Overall, the company said the macro-economic environment remained mixed, with clear improvement evident in the key non-residential markets in both the UK and US, contrasting with weaker activity levels in pockets of continental Europe.

In a statement issued with the results, Mr Murtagh said: “Conditions in our core markets are improving and our activity pipeline starting the new year is encouraging.”