Kingspan’s Gene Murtagh eyes further acquisitions

Insulation and building materials group Kingspan is eyeing further acquisitions to add to the four rivals it has bought so far this year and is also considering entering new territories.

The Irish group said on Monday that revenues rose 19 per cent in the six months ended June to €1.47 billion from €1.24 billion during the same period in 2015, while pretax profits grew 54 per cent to €154.8 million from €100.4 million.

Speaking after the company published its results, chief executive Gene Murtagh, confirmed that it is looking at adding to the four businesses that it has bought so far this year.

Suitors

However, he stressed that there is no certainty that it will do any further deals as other suitors are also likely to be pursuing the businesses that the group is considering buying.

Mr Murtagh also indicated that Kingspan, which has operations in Europe, North America, the Middle East and Australia, wants to enter new markets. "We are actively looking at Brazil, India and Russia, " he said.

Kingspan has committed to spending €209 million on acquisitions so far this year. It paid €83 million during the first half and has agreed to pay a further €126 million during the current six months.

In April, Kingspan subsidiary Joris Ide bought Euroclad in the UK and then added its European associate, Euroclad, earlier this month.

Mr Murtagh explained that these were the type of deals that the Belgian panel manufacturer would have done “had it not been bought by us” last year and that it is continuing to work on its growth strategy.

In April, Kingspan bought plastic water tanks maker, Tankworks, in Australia, and it plans to use the company as a base from which to launch its environmental business in that country.

Opportunities

In July, the group bought Germany company Essman, which makes skylights and ventilation systems. Mr Murtagh explained that Kingspan has always made and sold these products as an add-on to its core business.

It now plans to group these activities together in their own division. “We want to breathe some life into them for further growth opportunities,” he said.

Net debt rose by €20 million in the first half to €348 million but was actually down on the €449 million recorded at the end of June 2015.

Assuming that it does not make any further acquisitions, Kingspan’s chief executive expects that net liabilities will be equal to about half the group’s earnings at the end of 2016.

“That will leave us in an extremely strong position to exploit any opportunities next year,” Mr Murtagh predicted.

Meanwhile, the Cavan group’s Irish business grew by 40 per cent in the first half, making it the strongest performer in pure percentage terms.

Mr Murtagh believes that will continue to grow as construction here is still coming from a low base. “It is only about 4 per cent of our overall business and even if it keeps growing as we expect, it will stay in that zone,” he said.