A strong balance sheet, a considerably reduced debt, and a substantial streamlining of operations, were all achieved in the face of the toughest business environment the Group has ever faced. Certainly 2009 provided a tough challenge, with turnover dropping 33% to €1.125bn, and operating profit falling 60% to €62.7mn, but the energy and focus of the management team in facing these challenges has left Kingspan in very good shape facing into 2010.
During 2009 Kingspan accelerated its programme of product innovation to bring new products to market, such as the Kingspan powerpanel, a building integrated insulated photovoltaic panel. This is a key element of the Group’s “Insulate and Generate” theme, and is geared towards investors and building occupiers who increasingly demand higher renewable content in their building fabric. At the same time, Kingspan has expanded its product offering in several territories. In North America, there were encouraging early signs of market entry for Kingspan Thermomax solar thermal solutions, and in Australia the acquisition of AIR-CELL Innovations, the insulation material business, bolstered our existing rigid board and panel businesses in that region. Good progress was also made during the year in building the Insulated Panels business in North America which is now substantially integrated into the Kingspan model. In particular, the class leading Kingspan Benchmark architectural façade system which has been very successful in the US will shortly be launched in the Western European market in 2010.
With building energy standards set to increase in many of our key markets, including the UK, Western & Central Europe, the US and Australia, Kingspan will benefit from its transformed cost structure and from significant efficiencies at its new world class manufacturing facilities, when the upturn in these markets begins to take hold.
Dividend
In the context of the Company’s focus on reduction of debt and strengthening the balance sheet, the Board is not recommending that a final dividend be paid for the year ended 31 December 2009. However, resumption of a dividend will be considered by the Board based on performance meeting expectations in 2010.
Board changes
After more than 37 years with Kingspan, Brendan Murtagh has indicated his intention to retire after this year’s Annual General Meeting, when his term of appointment as a non-executive director expires. I would like to thank Brendan for his tremendous contribution to the Group over those years, both as an executive and latterly as a non-executive director.
During the year there were several Board changes. Brian Joyce and Eoin McCarthy both retired as non-executive directors, and Louis Eperjesi resigned as an executive director. I thank each of them for the role they played in the development of Kingspan during their periods of office. We also welcomed back Danny Kitchen as a non-executive director, who brings the benefit of his broad experience and an independent viewpoint to the Board. These changes reflect our commitment to refresh and strengthen the independent representation on the Board.
Management and employees
I also wish to express my thanks to the management and employees throughout the Group, for their hard work and focused determination during the year. We are fortunate to have such a high quality management team leading the business as we face the tough challenges posed by the global economic environment.
To the future
As a degree of stability now begins to return in most of our markets, we look once again to drive the business forward. With the global community committing to more and more energy conservation initiatives, Kingspan remains firmly focused on its strategy of providing a range of energy efficient and sustainable building solutions. And whilst there remain many challenges ahead, Kingspan’s solid performance in 2009 means that it is now well positioned to capitalize on future opportunities as they arise.
Eugene Murtagh
Chairman
1 March 2010
Buildings - the biggest consumer of energy
Kingspan EnvelopeFirst:
From its position as a global market leader, Kingspan is best positioned to provide high performance building envelope systems across the worldwide construction sector, delivering the largest energy savings and greenhouse gas CO2 reductions.