Insulation and building materials manufacturer Kingspan has reported a big jump in profits and revenues for 2021 despite the impact of "dramatic" input price inflation.
Kingspan said its profit after tax rose by 48% to €571m from €385m in 2020 while revenues for the year increased by 42% to €6.497 billion from €4.576 billion.
The company said its board has proposed a final dividend of 26 cent per ordinary share, following an interim dividend of 19.9 cent per ordinary share. This brings the total dividend for 2021 to 45.9 cent compared to 20.6 cent for 2020.
Kingspan said that 2021 saw "extraordinary volatility" in supply chains and wider society.
It said while this dynamic created significant challenges to the business - and indeed the industry - underlying demand remained strong during the year, although it weakened slightly in the fourth quarter.
Kingspan said its key raw materials also saw dramatic price inflation, and about €700m of cost increases were required to be passed on to customers.
It noted that order intake trends displayed in the first half eased off over the course of the second half, but the Insulated Panels global order backlog still finished the year ahead by 28% in volume.
It also said that the demand for significantly more efficient materials and methods of construction is clearly gaining much needed momentum.
"With the prevailing energy cost and supply threats around the world, it is likely that the drive toward conservation will be accelerated," it added.
During 2021, Kingspan invested a total of €714m on acquisitions, capital expenditure and financial investments.
The largest of these deals was for Logstor Group, a European based provider of highly insulated district heating infrastructure, which was bought in June for €245m. A deal for Romania based TeraSteel was also completed during the year.
The company also entered the Uruguay Insulated Panel market with the acquisition of 51% of Bromyros and it enhanced its insulation market in Australia and New Zealand with the acquisition of Thermakraft.
Kingspan also said today that it has signed an exclusive put option agreement to buy France-based Ondura Group from Naxicap Capital Partners and others for €550m.
Ondura makes roofing membranes and associated roofing solutions and it has 14 manufacturing sites and a distribution network in 100 countries worldwide.
In the 12 months to December 2021 Ondura had un-audited consolidated revenues of €424m with EBITDA of €63m, and trading profit of €55m. The existing Ondura management teams will be retained in the businesses when the deal is complete.
Gene Murtagh, Kingspan's chief executive, said the business delivered an "exceptional performance" last year, with growing sales to customers in the technology, online distribution, and automotive sectors instrumental in the results.
"Whilst dramatic input price inflation was a major feature, our cost recovery efforts helped ensure continued margin improvement," Gene Murtagh said.
The Kingspan CEO said the company continues to drive expansion through acquisitions, with over €0.5 billion invested in buying new businesses during the year.
Cladding issue
Mr Murtagh also said that Kingspan was prepared to contribute proportionately to an industry wide solution to the issue of cladding on high rise buildings across the UK that may need to be replaced in the wake of the Grenfell Tower fire.
Kingspan's K15 product made up 5% of the insulation layer of the tower's facade, but was not supplied or recommended by Kingspan and was substituted without its knowledge.
Earlier this week, the British Government said developers and manufacturers could be blocked from the UK housing market if they did not help fix cladding safety issues.
It also proposed changes that would put into law a commitment to protect leaseholders living in medium- or high-rise buildings from having to pay anything for the removal of unsafe cladding.
Mr Murtagh said it is very early days and there is a significant process underway across the entire industry.
But he added that Kingspan welcomes the constructive engagement and realises the issue has to be brought to a solution.
He told analysts that the company is absolutely prepared to stand by its products and customers and that K15 is completely safe when used correctly.
"In the vast majority of cases we've been able to satisfy people as to the integrity of our products," he claimed.
"But anyway, it needs a solution and it needs to be industry wide, and as I say we will contribute to it proportionately."
Sustainability targets
Gene Murtagh also said the company has made good progress on its Planet Passionate targets, achieving an absolute reduction in Scope 1 and 2 GHG emissions for the second year of the programme, with a 4.3% reduction achieved this year.
"We will also implement a €70 per tonne internal carbon charge from 2023 to accelerate the pace of decarbonisation across our global business," he added.
"Despite a slower fourth quarter, with a large order backlog we are cautiously optimistic about the outlook for this year, whilst mindful of the high bar in comparison with last year's performance," Mr Murtagh said.
"High energy costs and supply threats around the world are a catalyst for a focus on conservation measures, which is likely to accelerate the demand for lower energy solutions which we believe will be supportive of demand for our products," he added.
