US offers pathway to profit CRH paved in last recession

ANALYSIS:BACK IN the middle of another recession in the 1980s, Irish building materials company CRH began buying businesses in the US. It was a move that led to it becoming one of the biggest global players in its industry.

The US now looks to be offering the best growth prospects for another Irish company in a construction-related business, Kingspan.

The Cavan-based plc manufactures insulated panels and other energy-saving products that are fitted in buildings.

Last August, it bought Metecno, the second biggest insulated panel manufacturer in the US, for €75 million. Given what’s happened since, the move looks very prescient.

Energy, or saving it, is close to the top of President Barak Obama’s agenda. This could mean supports and incentives to encourage people to fit products such as insulation panels to new and existing buildings, with an obvious benefit to anyone in that business in the US.

Kingspan chief executive Gene Murtagh is encouraged by what the new administration is saying and hopes it will deliver for the company over the medium term.

“We’ve got our feet firmly under the table in the US,” he says. “All the right signals are coming from the new administration and they’ve placed the whole energy question second on the agenda.”

Much closer to home, the Republic is offering €100 million in grants to those who spend money refitting their homes with energy saving insulation.

Murtagh says that it could take a while for the impact of this to filter through. “There’s a bit of an infrastructural logjam at the moment in terms of people applying for the grants and in terms of contractors qualifying to do the work,” he says.

“But it always takes time for these things to work through the system, it will be something that we could see coming through in the second half of the year.”

There are well developed incentives in Britain, which Murtagh acknowledges are good for his business. Between 80 per cent and 85 per cent of the group’s sales came from supplying new buildings, so the fall-off in construction has had an obvious impact on its performance.

Getting people to refit existing structures will be key to returning the company to growth in its Irish and British markets.