Insulation and building materials manufacturer Kingspan has reported higher profits for the year to the end of December but said its revenues for the year dipped due to a deflation hit.
The Co Cavan-based company said its profit after tax rose by 6% to €654m from €616m in 2022 while its revenues dipped 3% to €8.091 billion from €8.341 billion.
The Kingspan board has proposed a final dividend of 26.6 cent, up from 23.8 cent in 2022.
During the year, the company spent €248.4m on acquisitions including a deal in April to buy 100% of the share capital of CaPlast for €86.9m.
The group also made a number of smaller acquisitions during the year for a combined cash consideration of €139.3m, including Alaço in Portugal, LRM in France in May as well as 51% of the share capital of MontFrio in Uruguay in June and Toode Group in the Baltics in September.
In June, Kingspan's Insulation division bought 80% of the share capital of HempFlax Building Solutions in Germany and 100% of the share capital of Thor Building Products in Australia. The Data + Flooring division acquired 70% of Q-nis in Ireland during September and 100% of the share capital of Provan Group in Belgium in November.
Today it said it has agreed a deal to buy the stonewool insulation business and assets of Karl Bachl Kunststoffverarbeitung (Bachl), which is based in Germany.
The transaction is expected to complete by the end of March and will be funded from existing cash reserves.
Breaking down its divisions, Kingspan said its Insulated Panels saw a sales decrease of 9% with strong activity in France, the US and LATAM offset by subdued volumes in central and eastern Europe and lower pricing due to input deflation.
The company said its Insulation sales were behind by 8%, driven by weak residential markets and price deflation led by inputs. But it added that its technical insulation was progressing well. The company announced a deal for 51% of Steico in January 2024.
It also reported strong traction on its Roofing + Waterproofing strategy with revenue in the division touching €500m. Its targeted North American market entry will be supported by a €750m capital injection over the next five years with the objective of achieving 15% of the relevant flat roofing market over time.
Kingspan also saw further progress at its Light, Air + Water division, with broader scale and margins progressing positively year on year.
It added that its Data + Flooring medium term pipeline is very encouraging and is being driven by demand in data and artificial intelligence applications.
Gene Murtagh, Kingspan's chief executive, said that despite markets and geographies moving at different speeds, the company delivered another year of record profits and record cash generation whilst continuing to innovate and diversify its revenue base.
"Through our Planet Passionate initiative we are well progressed in meeting our net zero ambitions by 2030, or sooner, and are already on the cusp of our 2030 ambition to recycle 1 billion PET bottles annually," Mr Murtagh said.
"Beyond insulation, each of our climate focused business units across Roofing + Waterproofing, Light, Air + Water and Data + Flooring are scaling at pace with every potential for each to exceed €1 billion divisional revenue over the coming years," he said.
Last month the company completed a deal to buy of 51% of Steico, a leading wood wool insulation firm, and Kingspan said today it has decided to ring-fence €750m of growth capital for its Roofing + Waterproofing business in the US over the next five years.
"These investments reflect our continuing ambition to innovate, diversify and future proof our businesses for sustainable growth over the longer term," the CEO said.
Looking ahead, the CEO said that given varying activity levels it is too early to provide any meaningful guidance on outlook, not least as seasonal factors have hampered early progress in some markets.
"However, given our robust balance sheet, strong development pipeline, strong structural demand for energy efficiency and the ever increasing and obvious impacts of climate change, we expect 2024 to be a year of continuing strategic and operational progress for Kingspan," he added.
On a call with analysts today, Kingspan CEO Gene Murtagh said it is quite likely the company will see some cost inflation in the not too distant future, possibly around chemicals and steel inputs.
Gene Murtagh said the start of 2024 has been fairly consistent with the fourth quarter of 2023 from a pricing trend perspective, adding that he does not expect pricing to go lower.
He also said that Kingspan was seeing a "reasonable amount" of stress among property developers, but not to a worrying extent, adding that the concerns were more about the UK rather than Germany.
Kingspan shares ended lower in Dublin trade today.
