Kingspan Group Plc · EURONEXT:KRX
Kingspan — H1 2017 Earnings Presentation
35 slides from Kingspan's earnings presentation, Aug 18, 2017
Slide 1: Kingspan 2017 Interim Results
KINGSPAN 2017 INTERIM RESULTS 18TH AUGUST 2017
Slide 2: Disclaimer
DISCLAIMER USA Neuroscience Center – Dri-Design Forward Looking Statements This presentation contains certain forward-looking statements including, without limitation, the Group’s financial position, business strategy, plans and objectives of management for future operations. Such forward-looking in
Slide 3: The Business
THE BUSINESS → A global leader in high performance insulation and building envelopes → Market leading positions in Products UK, Mainland Europe, North America and Australasia → Proprietary technology drives differentiation in product performance 3
Slide 4: What We Deliver
WHAT WE DELIVER Fully Excellence Integrated Comfort in Energy Envelope & Savings Solutions Architectural Building Inspiration Science 4
Slide 5: H1 2017 in a Nutshell
H1 2017 IN A NUTSHELL Kingspan 5104 Products 64% Insulation 0 a ii Insulated Panels Boards / 5% neces ers / ‘Access Floors €1.75 Drivers Billion Geography » Distribution > Leisure » Accommodation > Food > Manufacturing Sector » Data Management > Infrastructure 30? Newbuild Refurbishment Channel Mill
Slide 6: Our Strategy
OUR STRATEGY → Be the leader in high INNOVATION performance insulation globally – proprietary PENETRATION and differentiating technologies → Be the world’s leading provider of low energy building envelopes NET ZERO → Greater geographic reach – focus on The ENERGY Americas, Continental Europe and cer
Slide 7: Completing the Envelope
COMPLETING THE ENVELOPE Kingspan Insulation Boards Global Leadership Kingspan – continue to drive Insulated Panels worldwide reach & Facades through greenfield Global Leadership and consolidation – continue to drive worldwide reach through greenfield and consolidation Kingspan Access Floors Global L
Slide 8: 5 Year Financial Performance
5 YEAR FINANCIAL PERFORMANCE 340.9 365.9 3,568.2 3,108.5 2,774.3 255.9 1,891.2 1,776.8 148.5 122.8 2013 2014 2015 2016 2017* 2013 2014 2015 2016 2017* Revenue Trading Profit (€m) (CAGR 19.0%) (€m) (CAGR 31.4%) 8 * Analyst consensus
Slide 9: H1 2017 in Summary
H1 2017 IN SUMMARY → Insulated Panels sales growth of 17% with a continuing improvement in Western Europe, solid activity in the UK and tougher, although resilient, performances in North America and Revenue Eastern Europe. UP 19% → Insulation Boards sales growth of 8% with ongoing advancement of Koo
Slide 10: Financial Highlights
FINANCIAL HIGHLIGHTS H1 2017 H1 2016 Change cc* Revenue (€m) 1,749.3 1,468.1 +19% +21% Trading Profit (€m) 177.8 167.3 +6% +10% EBITDA (€m) 209.2 196.8 +6% +10% Earnings per share (cent) 74.4 70.6 +5% – Interim Dividend 11.0 10.0 +10% – Free Cashflow (€m) 39.4 92.6 -57% – Net Debt (€m) 440.3 348.1 +
Slide 11: Trading Profit & Margin Progression
TRADING PROFIT & MARGIN PROGRESSION 200.0 175.0 177.8 167.3 150.0 H1 16 FY 16 H1 17 125.0 Insulated Panels 11.8% 11.0% 10.5% 100.0 Insulation Boards 11.5% 11.4% 10.7% 111.7 75.0 Light & Air - - 3.7% 50.0 69.2 Environmental 5.3% 7.0% 7.5% 55.9 25.0 Access Floors 12.2% 12.5% 12.0% 0.0 H1 13 H1 14 H1 1
Slide 12: Group Sales & Profit Bridge
Revenue H1 16 1,468.1 Currency (28.7) Sales (€m) Acquisitions 153.5 Underlying 156.4 Revenue H1 17 1,749.3 GROUP SALES & PROFIT BRIDGE Trading Profit H1 16 167.3 Currency (5.8) Trading Profit (€m) Acquisitions 9.3 Underlying 7.0 Trading Profit H1 17 177.8 12
Slide 13: Free Cash Flow
(€m) FLOW FREE CASH EBITDA 209.2 Working Capital (84.9) WC/Sales 13.1% Non Cash/Pension 2.9 Interest (9.8) Tax (32.0) Net Capex (46.0) Free cash flow 39.4 13
Slide 14: Working Capital %
WORKING CAPITAL % Average 12.7% H1 13 12.8% H1 14 12.7% H1 15 14.2% H1 16 10.5% H1 17 13.1% 14
Slide 15: Movement in Net Debt
(€m) Net Debt Dec 16 427.9 MOVEMENT IN NET DEBT Free Cash Flow (39.4) Acquisitions 8.6 Dividend 42.0 Shares issued/fx etc. 1.2 Net Debt June 17 440.3 15
Slide 16: Strong ROCE
2013 12.3% STRONG ROCE 2014 13.4% 2015 15.2% 2016 17.3% H1 17 17.3% 16
Slide 17: Strong Balance Sheet
STRONG BALANCE SHEET → Cumulative total long term USA financing of €450m raised in last 2 Maryland Community Centre – years at an average fixed coupon Insulated Panels of 1.74%. → Existing €300m Revolving Credit Facility refinanced and replaced with new €500m facility on more favourable terms expiri
Slide 18: Sales by Geography
SALES BY GEOGRAPHY H1 H1 2016 2017 €m H1 17 H1 16 Constant Currency Change YoY % Change Britain & Northern Ireland 455.4 410.1 +22% +11% Mainland Europe 759.1 592.3 +28% +28% Americas 336.4 291.4 +12% +15% Republic of Ireland 66.2 59.5 +11% +11% Rest of World 132.2 114.8 +11% +15% Group Sales 1,749.
Slide 19: Insulated Panels
INSULATED PANELS → Solid sales performance overall. H1 17 H1 16 → QuadCore® sales representing 5% of Sales (€m) 1,111.7 949.5 total, up from virtually zero in H1 2016. % of Group Sales 64% 65% → Western Europe strong, in particular Analysis of YoY % Change Benelux, France and the Nordics. Underlying
Slide 20: Insulated Panels (cont.)
USA North Station Boston INSULATED PANELS (CONT.) – Insulated Panels → Focus on recovery of raw material inflation key in North America, even at expense of market share loss. → Penetration rates in Australia and New Zealand rising. → Non-residential activity in Turkey and the Middle East remains sub
Slide 21: Insulation Boards
INSULATION BOARDS → UK grew significantly owing to modest volume growth, Kooltherm® H1 17 H1 16 advancement and pronounced selling Sales (€m) 373.7 347.4 price increases. % of Group Sales 21% 24% → Continental Europe strong, particularly Analysis of YoY % Change Benelux, Germany and the Nordics. Und
Slide 22: Light & Air
LIGHT & AIR → New division formed in H2 2016. H1 17 H1 16 → Aim to develop global leadership Sales (€m) 81.7 - position in market for efficient % of Group Sales 5% - daylighting, smoke management and ventilation systems. → Presently manufacturing in Ireland, UK, France, Germany and North America. →
Slide 23: Access Floors
ACCESS FLOORS → Trading pattern similar to recent H1 17 H1 16 years. Sales (€m) 93.3 91.7 % of Group Sales 5% 6% → UK delivered a strong year-on-year result, albeit a softer pipeline towards Analysis of YoY % Change year end. Underlying Currency Acquisitions Total +4% -2% - +2% → Grade A office cons
Slide 24: Environmental
ENVIRONMENTAL → Solid H1 performance, underlying H1 17 H1 16 revenue +3%. Sales (€m) 88.9 79.5 % of Group Sales 5% 5% → Rainwater harvesting in Australia a key driver of growth. Rhino® brand Analysis of YoY % Change recently acquired. Underlying Currency Acquisitions Total +3% -6% +15% +12% → Efflue
Slide 25: Outlook
OUTLOOK Denmark Experimentarium Science & Leisure Centre – → End market activity to be broadly positive Insulated Panels during remainder of 2017. → Unrelenting chemical supply environment in nearer term with high pricing levels and constrained flow of materials. → Kingspan well positioned to at lea
Slide 26: Additional Information
ADDITIONAL ADDITIONAL INFORMATION INFORMATION Mexico Lintel Office – Insulated Panels 26
Slide 27: Our Evolution – Revenue
OUR EVOLUTION – REVENUE CAGR = 18.3% 3.8 3.6 2017 CONSENSUS 3.4 3.2 ENERGY EFFICENCY* 3.0 2.8 2.6 ENVIRONMENTAL CODES* 2.4 2.2 SPECIFICATION* 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Sales (€bn) * Key
Slide 28: Panel & Board – Sales Volume
PANEL & BOARD – SALES VOLUME 50.0 40.0 30.0 Millions M2 20.0 10.0 0.0 2010 2011 2012 2013 2014 2015 2016 2017 FC Panel Board 28
Slide 29: Global Organic Expansion
GLOBAL ORGANIC EXPANSION Nordics Kooltherm Facility 2019 UK Kankaanpää, Finland Kooltherm Facility 2020 QuadCore Panel Line Q1 2017 Leuze, Belgium Door Panel Line Q2 2017 Perpignan, France PIR Roofpanel Novosibirsk, California, USA Line Q4 2017 Russia QuadCore Facility 2019 Mixed Panel Winchester, U
Slide 30: Key Innovations
Kingspan QuadCore™ Rollout QuadCore™ Generation 2 Kooltherm® 100 Series QuadCore™ Roof Insulation Board Therma* Standard Insulation Board Kooltherm® Pipe Generation 2 PowerPanel® Generation 2 30
Slide 31: Insulates Better
~~ MINIGIIDAN Kingspan. INSULATES BETTER 47% 30% ee More Heat Loss' More Heat Loss' Heat Loss' Kingspan Kingspan Kingspan Kingspan ptim-R QuadCore Kooltherm® IPN? | Jovy 22% 22% 13% Reference EPS — Glass Rock L L L Point 0.030 \ : nk Fibre Mineral C 50. 038 10 . ess ess ESS paiyurethane O.0sIW/mK Fi
Slide 32: Kingspan v Construction Macro
KINGSPAN V CONSTRUCTION MACRO UK US 160 200 150 180 140 160 130 140 120 120 110 100 100 80 90 60 2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 2016 Germany The Netherlands 170 150 160 140 130 150 120 140 110 130 100 120 90 110 80 70 100 2009 2010 2011 2012 2013 2014 2015
Slide 33: Driving Penetration Growth
DRIVING PENETRATION GROWTH Aim to change Building Practices / Material Choices INSULATED PANELS 100% 100% 20% UK Germany North America 80% 80% 15% 60% 60% 10% 40% 40% 5% 20% 20% 0% 0% 0% 2005 2016 2020P 2005 2016 2020P 2005 2016 2020P INSULATION BOARDS 50% 14% 14% UK 12% Western Europe 12% Australia
Slide 34: Our Net Zero Energy Path
OUR NET ZERO ENERGY PATH 444 424 386 69% 327 317 312 307 57% 243 33% 28% 126 18% 88 9% 60 27 34 Total Renewable Energy GWh Total Energy Use GWh NZE %
Slide 35: Kingspan contact details
aw King span Dublin Road Kingscourt Co Cavan Ireland A82 XY31 Tel: +353 42 969 8000 Fax: +353 42 966 7501 Email: admin@kingspan.com www.kingspan.com