Kingspan eyes up expansion into Latin America
Building materials group reports sluggish first-quarter growth due to bad weather
Kingspan CEO Gene Murtagh: “I see our entry into Brazil as the beginnings of us taking on the Latin American market.” Photograph: Alan Betson
Gene Murtagh, the chief executive of Kingspan, says he sees its recent entry into the Brazilian market as “the start of a push into Latin America” for the insulation and building materials group, which held its agm in Dublin on Friday.
Mr Murtagh said Kingspan, which also yesterday reported first-quarter sales up 8 per cent cent to €895 million, would draw upon its experience gained expanding in developing markets in central and eastern Europe over recent decades, to help its drive into Latin America. It also has an operation in Colombia.
“I see our entry into Brazil as the beginnings of us taking on the Latin American market,” said Mr Murtagh, speaking to the media after the agm. He said Kingspan was prepared for the “humps and hollows” of its planned foray.
“We will have to build demand [over the long term] for our products there,” he said.
In a trading update issued ahead of the agm, Kingspan reported growth over the first quarter that was more “sluggish” than expected. It blamed poor weather conditions in many regions for delaying building projects.
Speaking later in the day, Mr Murtagh said he expects sales to catch up later in the year, as building projects got back on track.
He said there are currently no plans for Kingspan to spin off its US operations into a separate division, after fellow Irish materials giant CRH told The Irish Times that it will ”review” whether to launch a listing for its US arm.
“We will keep an open mind about it. But our US operations are much smaller than CRH,” said Mr Murtagh.
He said the company spies a market opportunity in the UK in the widespread refitting of hundreds of high-rise residential tower blocks, which is expected to take place there after last year’s Grenfell disaster in London.
More than 70 people died in the Grenfell disaster after the tower block’s outside cladding caught fire, engulfing the building.
On the acquisitions front, Mr Murtagh said Kingspan is currently trying to absorb about €600 million worth of purchases, so it is unlikely to enter into any major buyout deals for some time.
At the agm, all of the directors, including the chairman, Mr Murtagh’s father Eugene, were re-elected. Shareholders commended the board on the performance of the company. However, one shareholder, who did not give his name, cautioned the board to be aware that Brazil is a risky market.