Kingspan, the global leader in high performance insulation and building envelope solutions, reports its preliminary results for the year ended 31 December 2017.

Financial Highlights:

· Revenue up 18% to €3.7bn, (pre-currency, up 20%).

· Trading profit up 11% to €377.5m, (pre-currency, up 14%).

· Acquisitions contributed 9% to sales growth and 8% to trading profit growth in the year.

· Group trading margin of 10.3%, a decrease of 70bps.

· Basic EPS up 11% to 159.0 cent.

· Final dividend per share of 26.0 cent. Total dividend for the year up 10% to 37.0 cent.

· Year-end net debt of €463.9m (2016: €427.9m). Net debt to EBITDA of 1.05x (2016: 1.06x).

· Strong ROCE of 17.8% (2016:17.3%).

Operational Highlights:

  • Insulated Panel sales growth of 17%. A positive performance in Continental Europe, and a solid outcome in North America both drove this number despite the sharp slowdown in the UK towards year end.
  • Insulation Board sales growth of 12% owing to significant price inflation and the structural shift to Kooltherm® in the UK, Ireland and Mainland Europe.
  • Light & Air sales of €205m marking a strong first full year of trading for this division and the development of a unique US and European footprint.
  • A strong year for Environmental with ongoing improvement in profitability. Access Floors had a solid year, albeit with a weakening UK backdrop.
  • The recovery of raw material inflation was a key theme during 2017. Supply eased somewhat toward year-end, although prices remain high into the current period.
  • A record committed acquisition spend of €614m, of which €174m was completed during 2017. Key developments completed or pending include market entry into Brazil, Colombia and Southern Europe as well as an extension of our presence in Western and Central Europe.

Gene M. Murtagh, Chief Executive of Kingspan commented:

“2017 was another year of strong performance for Kingspan. We have continued our globalisation strategy with several significant acquisitions, including establishing a market leading presence in Latin America. Our new Light & Air division is performing ahead of expectations and expanding the range of product solutions the business offers. The challenge of increased input costs has been effectively managed to minimise the impact on profit margins. Notwithstanding the weakening UK market our well diversified business is well placed for the longer term”.

Business Review

2017 was a significant year for Kingspan which, despite its challenges, was a record period for the Group. Revenue rose by 18.0% to €3.7bn, and trading profit grew by 10.7% to €377.5m. The resultant increase in EPS was 10.6% to 159.0 cent per share. In addition to volume growth, price inflation also contributed to sales as we pushed to recover unprecedented raw material cost increases.

Activity across our Mainland European markets was somewhat mixed, led in particular by strong performances in France, Benelux and the Nordics as penetration of high performance insulation continues to increase in these regions. Germany, in contrast, was deeply competitive during the year as capacity increases weighed on market prices. The UK performed resiliently for much of the year. However, growing economic and political uncertainty made itself increasingly evident in market activity, with order intake weakening sharply towards year-end, largely in the non-residential segment. North American revenue was modestly ahead and Latin America grew meaningfully through our new ventures in Brazil and Colombia. Chemical cost increases were at levels not experienced before, which when combined with supply tightness led to a period of balancing margin and growth priorities and the need for significant price increases for our own solutions. In all, we successfully recovered the input increases, although in the process conceded some market share to alternative products which over time we expect to regain. Presently, we are experiencing improved raw material supply albeit with prices remaining high.

2017 was also a year of record acquisition activity for Kingspan. In total, between completions and signed contracts we committed almost €614m, €174m of which was incurred during the year with a further €440m currently awaiting regulatory approval. A centrepiece of these developments has been our increased exposure to exciting new frontiers including Latin America and Southern Europe, as well as adding significantly to our insulation technology via the Synthesia business. In addition to these acquisitions we also invested a net amount of €85.6m in capital expenditure with a strong emphasis on the organic global roll-out of our Insulated Panel and Insulation Boards businesses.

We continue to make progress on our internal and ongoing environmental agenda and reached a Net Zero Energy level of 69%, which brings us a sizeable step closer to our 2020 target of achieving 100% across the globe.