Kingspan: Capacity to expand housing output by 30% 'with ease'
The building industry here has the capacity to expand housing output by 30% a year over the next few years, without causing huge strain, the chief executive of Kingspan has said.
Gene Murtagh, who heads up the Irish multinational insulation board supplier, said it was clear that whoever emerged to form the next government would have to build more homes.
He said last year's output of just over 20,000 housing units could be stepped up by 25% to 30% a year “with ease”, to eventually meet the estimated annual demand of 30,000 to 40,000 new homes, and the building industry could readily adjust to source the workers. If a large number of new homes were built, Kingspan could tap its share of the output, Mr Murtgh said.
Unveiling its 2019 earnings, the Kingspan CEO said it had delivered a "solid" although “not spectacular” 12% uplift in trading profit, after Brexit and British political uncertainty weighed on demand for its products in Britain. Elsewhere, it posted "strong" sales in the Americas and in continental Europe– with the exception of Germany.
Net profit rose 13% to €377.8m as revenues increased 7% to more than €4.6bn. The UK accounts for a good slice of Kingspan’s global sales and the slowdown there in the months before the election victory by Boris Johnson, weighed on the company.
Mr Murtagh said he had not since then detected anything of the scale of a so-called 'Boris bounce' for the British construction industry, but Kingspan order books had picked up there as recently as the last three or four weeks, though the size of any pickup remains unclear.
“Three or four months ago we were in the eye of the storm. Nobody knew whether Brexit was happening and nobody knew whether there would be a stable [London] government. And that curtailed investment,” he said.
Asked if Mr Johnson was opening the purse strings, Mr Murtagh said the extent to which Kingspan would benefit would depend on whether Mr Johnson invested in housing, and not through any UK increased spending on road and rail. Referring to UK election pledges, he said the company wasn’t “counting chickens just yet”.
However, he said he doubted whether the British government's plan for a points-based jobs permit would get implemented in its current form because the UK was effectively at full employment and the British prime minister would need extra EU workers if he were to implement his election investment pledges. And few people knew whether the UK and the EU would strike a final trade deal by the end of the year, he said.
On acquisitions, Mr Murtgah said he had not detected market impatience for the company to step up its M& activity. “We have taken it steady for a long time and that is going to be our continued strategy,” he said. It could easily spend €750m this year and between €500m and €700m a year for the next couple of years on acquisitions, and was looking at “plenty of active projects”.
But there was no single large deal in the pipeline, Mr Murtagh said. "Only a small portion [of M&A] is focused on Britain because our market shares for competition purposes won’t allow it," and acquisition targets would instead be in continental Europe and North America, he said. Kingspan shares have climbed 66% in the past year, to value it at €11.7bn.
