Profits up 50% at Grenfell insulation firm Kingspan

Kingspan Group has reported a 50% increase in its pre-tax profit boosted by ‘strong’ sales of its insulation products as it successfully passed rising raw materials costs on to customers.

The Irish materials giant this morning reported a pre-tax profit of €689m for the year to 31 December, up from €459m the previous year. Its preliminary results also showed a 42% increase in revenue to €6.5bn.

It said: “2021 was a year marked by extraordinary volatility in supply chains and wider society. While this dynamic created significant challenges to our business, and indeed our industry, underlying demand remained strong through the year, albeit somewhat weaker in quarter four.

“Our key raw materials also saw dramatic price inflation, and in all, in the region of €700m of cost increases were required to be passed through to market. The result of all of this was a record performance by the group.”

Kingspan said its turnover was boosted by a 45% increase in sales of its insulated panel products which were “driven by strong momentum in construction generally”.

It said:“raw material-led price growth [was] further enhanced by strong demand in high growth sectors”.

Sales of insulation increased 50% year-on-year and were 11% ahead of expectations, which Kingspan said reflected strong demand in key markets and inflation recovery on pricing. Gene Murtagh, chief executive of Kingspan said growing sales in the technology, online distribution and automotive sectors were ‘instrumental’ in the results.

However, the group said that sales of its insulation product eased back in the second half of 2021 due to high inventories among distributors built up earlier in the year as prices rose.

Acquisitions also contributed 12% to sales growth and 11% to trading profit growth in 2021, Kingspan said. The group spent €714m on acquisitions and other financial investments in the year, including the €245m purchase of European district heating infrastructure provider Logstor.

It also announced today that it has reached agreement to acquire French roofing manufacturer Ondura group for £550m.

Sales of Kingspan’s Kooltherm insulation products were “modestly ahead of expectations”, the preliminary results statement said.

The group’s Kooltherm K15 product hit the headlines after it emerged a small amount of it had been installed on Grenfell Tower. Kingspan later denied the firm had acted in a dangerous way when it emerged it had continued to sell Kooltherm K15 insulation for 14 years using a safety test certificate for a previous version of the product.

The firm was also forced to recall batches of its Kooltherm K15 product last month after being hit by a notice from the Office for Product Safety and Standards. It was initially found to meet a lower fire safety performance rating than advertised, although Kingspan said the material passed later tests and it is confident there is no product safety issue.

The results statement made no mention of housiing secretary Michael Gove’s threat last month to force cladding and insulation manufacturers to pay into a fire safety remediation fund or face a ban on selling products in the United Kingdom.