Building products group Kingspan is to embark on a major expansion programme involving spending #350 million (£275 million) on acquisitions. The move should see the company double in size within four years. Announcing a 22 per cent rise in pre-tax profits to #58.7 million in 1999, chairman Mr Eugene Murtagh, told The Irish Times, the group also wanted to expand into the US.
The expansion would be funded from internal sources and there were no medium-term plans to go to the shareholders, he said. With the goal of doubling the size of the company "we will continue to seek out strategically important acquisitions".
Mr Murtagh also expressed optimism for this year "with profits growth weighted more towards the second half". This year would be a period of strategy positioning for the group's products, he said. "Achievement of significant volume increases in all product grouping remains central to the group's plans in the immediate future," he said. "We will be taking steps to increase capacities through increased capital expenditure and by suitable acquisitions."
The group made several acquisitions towards the end of last year, but these are not expected to make a significant contribution to its performance until next year. The latest profit figures are broadly in line with brokers' predictions. The 25 per cent rise in earnings per share to 27.2 cents, is somewhat ahead. Sales grew by 44 per cent to #532.5 million. All areas showed growth and acquisitions accounted for #61.99 million but there was still underlying growth of 38 per cent. The largest area, building components, has increased from #255.1 million to #304.6 million. The second largest, insulation products, rose from #68.7 million to #72.6 million and environmental containers increased from #44.9 million to #60.8 million. The new raised floor division, following the takeover of Hewetson in January 1999, contributed #69.7 million.
Kingspan disposed of parts of Hewetson which it considered did not fit and these reduced the acquisition cost. Further capital investment is now under way to consolidate the production of the enlarged raised-access floor business at the Hewetson site at Hull.
Kingspan's shareholders are to benefit from the growth. The final dividend is being raised by 45 per cent to 1.57 cents, making a total of 2.50 cents, or 46 per cent higher than the previous year.
Reflecting acquisitions, the gearing has risen from 40 per cent to 72 per cent. Mr Alan Murtagh, one of Mr Brendan Murtagh's sons, has been reinstated in a junior position in the firm. This followed a review by the non-executive directors, after the London Stock Exchange decision not to take any action in relation to share dealings by people connected with the company in shares of a targeted takeover firm.
The share deals were in the names of the wife and a close friend of the two sons of Mr Brendan Murtagh, an executive director at the time. Mr Brendan Murtagh had resigned as a director. The other son has chosen not to return to the firm.
