Hello, everyone, and welcome to Kingspan Preliminary Results 2023. My name is Bruno, and I'll be operating your call today. During this presentation, you can register to ask a question by pressing Star followed by one on your telephone keypad. I'll now hand over to your host and CEO, Gene Murtagh. Please go ahead.
Thanks, Bruno. Good morning, everybody, and welcome to our 2023 results call. We take you directly into the detail on slide number 3, please, titled: 2023 in summary. So basically, revenue just over EUR 8 billion, which was -3%, and we'll go through the detail of the makeup of that shortly. Trading profits 5% ahead. Earnings up 7%, and I think very significantly, greenhouse gas emissions, scope one and two, down over 50%, which obviously was a fairly monumental year in terms of emission reductions across the business. By the business units, Insulated panels, sales decreased 9%. Very mixed markets, which we highlighted all through the year.
Strong volume performance in France, the U.S. and Latin America, which I think not surprisingly, was offset by subdued volumes in Central Eastern Europe and indeed in the Nordics. The vast majority of the reduction really was related to giving up cost deflation in our selling prices. So in essence, the cost declines in all of our businesses were passed through, so funded essentially by cost reductions. Similarly, in the Insulation business, behind again by 8, I'd say reflecting very much the same type of trading pattern. The technical Insulation business and most significantly around district heating, had a very strong year. We expect that ongoing to continue to perform very well for us, although it might be a little bit more subdued this year with what I think the deflation in gas prices.
But over the longer haul, we expect this to be a very significant performer for the business. Significantly, we have been on a path of finding out the full spectrum of Insulation activities across the business and technologies. We took a very significant step forward on that front in recent times, even since the close of the year. So we've taken a 51% stake in the world's largest producer of wood wool Insulation , Steico. We also entered the hemp Insulation business with the acquisition of HempFlax during the year. And just this morning, we made an announcement that we acquired the stone wool assets of Bachi in Germany, or we've signed an agreement to acquire the stone wool assets of Bachi in Germany.
In summary, that brings us into the mineral fiber end, which is something we've signaled for a long time as part of the full spectrum. This particular facility is the newest technology in Europe. When our investment is complete, it'll be about 70,000 tons capacity, and over the next three years or so, we will invest further to get us to as close to zero carbon as possible, and that will be our differentiator in this sector going forward. On our Roofing & Waterproofing business, again, I would say significant progress, revenue touching EUR 500 million, and that's predominantly Europe. Our presence in North America is very insignificant for the time being.
But what we have, agreed is that we are allocating EUR 750 million of capital to this sector, over the foreseeable future, and that will be largely around the establishment of greenfield, combined membrane and polyiso facilities, and also around, metal roofing trims and fabrications. So essentially, we're going to be, probably over the next five years, establishing five-six facilities, and over the next two years, at least two. And we'll come back to that later on in the, in the discussion. Further progress on the Light & Air business, revenue close to EUR 1 billion. I think more significantly, the margins improved, as we guided, and we expect to see further margin enhancement in that business the, over the current year.
Our Data & Flooring business has very strong momentum, in particular in its data pipeline. The first half of this year will show meaningful improvement, and we think real traction will be very visible in our revenue and order intake in the second half of the year. Very, exciting on that whole front as well. I'll hand you over to Geoff now to take us through the detail.
Thanks, Gene . I'm turning to slide 16 for the financial highlights. Group revenues EUR 8.1 billion, down 3% versus 2022, and I'll come to the constituents of that in a second. Trading profit growth of EUR 877 million, up 5%, that's pretty much in line with the guidance that we issued in November. Earnings per share up 7% to EUR 3.52. Our total dividend for the year up 7% in line with earnings. So that includes a final dividend of EUR 0.266. We had a record by a considerable margin in free cash flow, EUR 891 million of free cash generated in the year. And again, I'll deal with that separately in a second.
Pretty significant reduction in debt in the year, net debt at EUR 980 million, down 36%. Bearing in mind, that also happened against the context of a development spend of EUR 480 million in the year between CapEx and M&A, so a considerable reduction. Our trading margin advanced during the year by 80 basis points, and we'll come to the divisional mix of that in a second. Our effective tax rate, 17.7%, and that's what we're penciling in for our effective rate in 2024. Leverage levels, 0.97x net debt to EBITDA, so below the 1x. And a good progress on our ROCE measure, advancing to 17%, up from 15.9% in 2022.
Turning to the next page, just to deal with the margin profile of the business. Initially, on the right-hand side of that page, you'll see the progression in our Trading Profit since 2019. So compounded up 15.5%, 2019 through to 2023. From a margin perspective, dealing firstly with Insulated Panels, 12.2%. So very, very good progress year-over-year, reflecting market mix, product mix, but also volume growth in the second half of the year, in particular, where our annual volumes in the second half of 2023 grew by 8% versus the second half of 2022. Insulation margin, 9.5%.
This is the division which faces the residential market more than our other divisions, and obviously, that's been under pressure worldwide. So the reduction in the margin in the year reflects the 9% underlying reduction in sales during the year. And again, we're penciling in progress towards 10% in the current year in insulation. Roofing and waterproofing, similar margin year-over-year. At this stage in the development of roofing and waterproofing, it has been about establishing the infrastructure and the business, but we're very much committed to a medium-term return on sales objective of 10% in the division.
As Gene referred to at the outset, Light, Air, and Water saw good progress in its margin during the year, up to 8.1%. And again, inside the next couple of years or so, we should be knocking on the door of 10%. And Data and Flooring had a very strong margin performance in the year at 13.5%. So overall, that combined to give us 80 basis points of an increase year-on-year. The next page, so Bridges revenues and profits from 2022 to 2023, and just dealing with revenues in the first instance.
So you'll see that underlying revenues were down 7% or EUR 612 million, and the driver of that was the year-on-year reduction in raw material prices and the pass-through of that to our end markets was the driver. Acquisitions contributed EUR 466 million of sales in the year. And currency was a 1% or so negative in the year in terms of currency translation. From a profit perspective, the underlying progression in the margin of 80 basis points gave us an additional EUR 29 million of profit year-on-year. Acquisitions contributed 30 million, and currency was -2% in terms of the impact on trading profit.
The next page, page 19, sets out the geographic profile year-over-year, and you will see that the key regions are more or less identical year-over-year in terms of the key end markets. Page 20 deals with our record free cash flow performance, EBITDA in excess of EUR 1 billion. Working capital reduced by EUR 298 million. The principal reason for that was a reduction in inventories comprising about EUR 280 million of that. Our working capital to sales ratio was 11.3% compared to 14.5% in 2022. So we're back to much more normalized levels of working capital compared to the last two financial years where we had elevated inventory levels due to supply chain disruptions and associated matters.
But we're back at our longer-term average rate from a working capital perspective. Net CapEx in the year, EUR 233 million. Net finance cost, EUR 36 million. Taxation in line with the income statement charge during the year. So all of that combined to give us EUR 890 million of free cash flow in the year. From a debt perspective, as I referenced at the outset, a 36% reduction in debt, and the principal reason for that was the free cash flow, offset by the acquisition spend in the year. But the strength of our balance sheet, just some commentary on that, set out on page 22. Leverage, as I mentioned earlier, 0.97 x.
We issued a new private placement loan note in June 2023 with a six-year maturity. That issuance is in excess of EUR 300 million. Our total available liquidity at the end of December was EUR 1.87 billion, and that reflects the combination of cash balances on hand and undrawn facilities. That, combined with our relatively low level of leverage at the end of the year, gives us with plenty of optionality in terms of the development of the business. The weighted average maturity of all outstanding private placement loan notes is five years. The ROCE performance is set out on page 23. It was pleasing to see us return back to 17% during 2023.
The profit growth aided that and the reduction in working capital helped as well, clearly. The working capital metrics are set out on the right-hand side of the slide. And you'll see we're closer to where we were prior to 2019. 11.5%-12% has been our long-run average working capital to sales. So we're back generally in that zone now, and that's you can model 11.5% as being our working capital investment in terms of the working capital to sales ratio as we go forward. So with that, I'll hand back to Gene.
Great, Geoff, thank you. Just take you to slide 29, which is titled Outlook. Naturally, it's very difficult to call this at such an early stage in the year. Like the vast majority of businesses in our industry, it was a slow start kind of hampered by, I'd say, an atypically cold start to the year, actually, in many markets. Activity has picked up notably in recent weeks. And I'd say encouragingly from an order intake perspective, the insulated panels business has been up for eight months in a row. That trend has continued into 2024, which, as I say, is encouraging.
And a relatively similar trend on the board business as well, as we look around the business globally. So early days, slow start, but no reason at all to think that this won't pick up to our normal pace in the very foreseeable future. So, with that, we're happy to open it up to questions from the floor.
Ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. That's star one on your telephone keypad. To withdraw your question, star followed by two, and please do also remember to unmute your microphone when it's your turn to speak. We do have our first question, comes from Flor O'Donoghue from Davy. Flor, your line's now open.
Thank you, and good morning, everyone. I'll just hone in on the-
Good morning.
Hello, Katrina, can you hear me?
Yeah, we can hear you.
Great.
Yeah.
Sorry, apologies about that. Sorry. Yeah, sorry. I was just gonna say I'm gonna focus in on the planned investment in roofing in North America. Just be interested to hear your thoughts around what you're hoping to achieve, what the impact could be with the level of projected investment, and maybe also, if you could give us a recap on the industrial logic behind what you're planning to do. I know it was covered as well in the event in Lyon last year, but just to hear again, about the kind of bigger picture around this, if that's okay.
Sure, Flor. Like, it's not particularly a secret that we've been looking at the flat roofing sector, in particular in North America. We have a long-established and very successful presence in that market from the insulated panel business and the flooring business, also insulation and daylighting. So it's a clear gap in our portfolio. It's an extraordinarily attractive market. And from a technology point of view, we have it all in-house. So in terms of our ability to produce membrane and polyiso insulation, like we've, as I say, we've got that in-house, and we've been at it donkeys years from an insulation perspective. We just see scope to carve out around a 15% share of the market over a reasonable time horizon.
But to do that, we're gonna have to greenfield with the latest technology. And actually that process is well underway. So the core team is hired. We're closing in on two existing facilities, one in the Northeast, one in Mid-America, which would obviously fast-track the process. And we're pretty much at final spec stage on equipment selection. So yeah, it's obviously from the ground up, and it'll take time, but you'd be very aware of how attractive the profile of that sector is in the U.S., so it's unavoidable for us, really.
Just to follow up on that, Gene, how much of the EUR 750 million could potentially be inorganic? I know you mentioned both organic and inorganic as...
Like, broadly, Flor, maybe half, half, where we'll have, you know, bite-sized bolt-ons to complement the whole greenfield piece.
In terms of, have you any sense of what that ultimately, in terms of what could translate into, kind of a EUR 750 million investment could mean from a, from a revenue perspective?
Probably double that.
Great. Very good. Thanks, Gene.
It's gonna take some time, Flor.
Of course, yeah. Thank you.
Thanks, Flor.
Our next question comes from Shane Carberry from Goodbody. Shane, you may proceed with your question.
Thank you very much, guys, and thanks for taking my questions. Three from me, if I could. The first is probably on the second announcement, which came out today. If you could give us a little bit more color on just, you know, the market opportunity there from a stone wool perspective, would be helpful. The second is, I kind of note in the release you talk about data on flooring potentially getting to over EUR 1 billion in sales over the next five years. Be interested to kind of hear a little bit more about how you get there. And I also know, you know, the margin data on flooring this year was really, really strong at 13.5%. So what is the kind of sustainable margin there going forward?
And then the last one for me is just, we obviously saw the recent news around Nordic Waterproofing as well last week. Could, could we get an update there from your perspective around the state of play there? Thanks, guys.
Sure. Sure, Shane. On the stone wool side, you know, we want kind of a balanced presence in this. We have no ambition whatsoever to have, you know, to pivot our existing kind of strategy and technology towards this. It's very much about, we've stated for a long time that the full spectrum and complete offering is absolutely fundamental to our thinking going forward. And the reason for that is that different technologies suit different applications, and that's the long and short of it. And we want to be able to provide the most complete package to our specifiers and customers.
As you know, we're the world's largest producer of stone wool core insulated panels, which is about 12% of our portfolio, and we've been at that for literally 20+ years. But in terms of the raw material side of it, we've - it's been a gap, and this is a very digestible newest technology entry point. The market in Europe is probably something in the order of EUR 4 billion. So we'll just—we'll creep away at that, and kind of see how we go. From the Data and Flooring side, yeah, the EUR 1 billion target, which we talked about at the CMD in Lyon last year, is something that we can achieve largely organically over the next five years or so.
It's going to take a lot of investment in facilities, and it's really supported by the ever-increasing appetite for data. And of course, with AI just at its very embryonic stage, you know, that's. It's yet to see, you know, what that will deliver. But for sure, the data requirement is going to increase radically, and we're very well positioned to take advantage of that. And from a margin perspective, flat to up is really the profile we would expect to see. And then lastly was on Nordic. So on Nordic, that's going through, obviously, its formal offer process, and it's going through the antitrust process, concurrently. We made our offer of SEK 160, and that's our offer.
So this is our fifth public outing in terms of going for public organizations. And each time we've made an offer, stuck to our price, and that will be the very same in this particular case.
Understood. That's really helpful. Thanks, guys.
Our next question comes from Arnaud Lehman from Bank of America. Arnold, you may proceed with your question.
Thank you very much. It's Arnaud Lehman from Bank of America.
Right.
Just, maybe three quick questions. Could you come back on the trend in order intake in panels, in Q4 and into January? Sounds like they were quite consistent with your comments from Q3. But, how much visibility, how much confidence do you have that the panels volumes can continue to increase, in 2024? That's my first question. On insulation, especially on insulation boards, it sounds like residential markets are still weak. Are you seeing any sign of pricing pressure for insulation products in the Q4? And, lastly, on the tax rate, I think you confirmed the tax rate to be unchanged, but there is this rule around the 15% global minimum tax rate from 2023. Is there any impact to expect on Kingspan?
Thank you.
Thanks, Arnold. I'll take two of those three questions. Firstly, to deal with intake trends on panels, I think we had flagged in the Q3 of last year that we were starting to see a pickup in order intake trends across the business. We were up in seven consecutive months versus the same month of the previous year last year, and that has continued into the early part of this year. I suppose the comparison and the comparative is also relevant. So, you know, we're coming from a pretty subdued base, but nonetheless, it's growth.
Our sales out the door in Insulated Panels were up 8% in volume in the second half of the year, and that implies that the order intake trend in advance of that was trending similarly. And that's the shape of things as we move into the early part of this year. In terms of the global minimum effective tax rate of 15%, we're already operating above that. So the 17.7% effective rate that we had in 2023, absent any individual tax rate changes in key territories, that's our effective tax rate guidance for the next two years.
Sorry, Arnold, on the insulation board side, residential markets, unsurprisingly weak. You know that from everybody else. You know, that's particularly notable in Germany and the Nordics, I'd say. From a pricing trend perspective, the beginning of the year is fairly consistent with Q4, and we certainly don't expect it to be going any lower. And if anything, this affects the insulated panel business as well. It's quite likely that we see some cost inflation in the not-too-distant future.
And possibly around chemicals and steel. It feels to be trending that way, at least in Europe. As always, you can take it that that gets fully passed through to the market.
That's very clear. Thank you very much.
Thanks, Arnold.
Our next question comes from George Sheridan from BNP Paribas. George, your line is now open.
Morning, gents. Thanks for taking my question. So just on the U.S. roofing expansion. So the U.S. roofing market's already very consolidated on the production side and the distribution side, hence why it's so attractive. But with that in mind, how do you grow organically in that market? And then also, should we assume that this investment, this $750 million, does that take the acquisition of a large U.S. roofing platform off the table?
Well, they're two reasonably sensitive questions. On the second one, like, you know, I wouldn't say it takes anything off the table. Like, we're never closed to any of that. But to some extent, it's pretty unrelated. In terms of it being a consolidated market, you know, we've a lot of experience of breaking into markets forever. You know, we have a very well-established presence in our direct route to market via the insulated panels business, and naturally, we'll be leveraging those relationships on that platform. And from an insulation board perspective, bear in mind that we have an insulation presence in non-roofing, which also has appetite for polyiso board in non-roofing applications.
So there's a number of different combinations here that we will be exploring.
Okay. And then, my second question was just on Europe. We heard some stories around signs of financial stress among developers, particularly in Germany. Are you seeing any signs of cancellation or poor customer credit or any signs of distress among customers?
Yes, but not to a worrying extent. I think it's fair to say there is a reasonable amount of stress around. Germany hasn't affected us today. It's probably more so the U.K. is what we'd be most concerned about on that front.
Okay, and any risk in France? Obviously, that's been a very resilient market for you guys.
Doesn't feel like it for now.
Okay. All right, I'll leave it there. Thanks, guys.
Thanks, George.
Our next question comes from Gregor Kuglitsch from UBS. Gregor, your line is now open.
Hi, good morning. I've got a few questions as well, please. Maybe coming back to Data and Flooring. You're right, you sort of mentioned the EUR 1 billion back in October, but I think you also said the margins could be up to, I think you said 20%. Maybe that was heavily rounded. But can you just tell us, is there anything going on in terms of the profitability, particularly the sort of data-related work or revenues that you expect to be generating in that division as we sort of build that out? That's the first question. The second question is pricing. So I appreciate we're sort of interpolating exit rates and so on, but looking at my sort of crude math, it suggests that you're exiting panels at nearly down 20% in terms of price.
I don't know if that's maybe a bit much. I don't know. Maybe you can correct me if that's wrong. Just want to understand, I guess, if things stay as they are today, what 2024 price increase, decline rather, would be, just to sort of everything else equal? Then there's lots of different numbers now with CapEx and different divisions. But can you just remind us or, I guess, summarize if you do all of these investments, roofing, Data and Flooring, et cetera, what should be the sort of annual CapEx envelope going forward, let's say, over the next two years? Thank you.
Thanks, Gregor. I'll, deal with a number of those. On Data and Flooring, I think the margin of 13.5% is a decent margin, and I think while there's scope to, to progress that, we're not holding out the prospect of 20% in the, in the near, in the near term. But it ought to have some scope to advance from where it is now in the fullness of time. Secondly, on, just on pricing, generally, panels pricing, reflecting input price moves during 2023 was probably down mid-teens in the second half of the year versus the second half of 2022.
And pricing actually now is reasonably stable as we've entered 2024, but nonetheless will be down versus where we were this time last year. So, you know, in terms of the moving parts, from a sales perspective, we'll have volume - we ought to have some volume growth in the early part of the year, as we've outlined in the likes of insulated panel. But there will be an offset in terms of the impact of pricing year-on-year. It makes little sense for us to guide more beyond that in terms of where pricing is likely to be later in the year, 'cause that will be a - i t's more likely than not that we'll see inflation rather than deflation.
As we've done in the past, if we see a little bit of inflation, well, then clearly we'd be in the market to recover that. So, as I say, there's a number of moving parts in all of that. On CapEx, we do expect our CapEx to tick up a little bit in 2024, in the region of EUR 250 million, and the principal reason for that is the early stage, in, in investment in the roofing and waterproofing, strategy that we've outlined for the US. Okay, thank you.
Thanks, Gregor.
Our next question comes from Yves Bromehead from Société Générale. Yves, your line's now open.
Good morning, everyone. Two questions on my side. The first one, just coming back on the U.S. flat roof market. I just wanted to understand, can you actually provide a bit more granularity into the capacity that you're adding in the market? And also, what's the sort of projected OpEx here, especially in terms of marketing and commercial push. Do you need to go towards a hiring spree there, or do you have the teams in-house that you can leverage to cross-sell products? And maybe, just on that point, you mentioned 15% return on sales. Some of your competitors are north of 20%, so what's the gap here? And my second question, if I could just push you on the guidance for the 2024.
If we have an exit rate, which implies lower prices in 2024, could EBIT actually be down in 2024 versus 2023? Thank you.
So just as a first phase, like, let's say, over the next three years, we establish three combined facilities, plus one for metal fabrications and trims. Which, by the way, is very much a kind of a core skill zone of ours already, right around the world. And it's very much a part of the package that has to get offered on the roof. So it's membrane, it's polyiso board, and it's fabrications to go with it is the key. And by the way, we're not under any illusions as to the kind of hill we've got to climb in getting into this market. So three combined facilities would be able to give us something in the order of EUR 750 million of revenue.
Obviously, that's going to take a reasonable time to build up. From a return on sales perspective, we think 15% is a respectable target. I hear what you're saying about the margins that are in the existing market, but you know, from history, they are very recent.
Yeah, and just then, in terms of the outlook for 2024, we're not giving prescriptive guidance, but I'd make the following observations. I mean, our margin of 10.8%, give or take, we ought to be able to hold that as we move through 2024. As we've outlined earlier, we've got volume growth in insulated panels. That clearly will be helpful. There is a pricing headwind year-on-year in the early part of the year versus the early part of last year. But we do expect a little bit of inflation as we move through the year. So, you know, they're all going to be clearly key influences on the outcome.
Thank you very much.
Thanks, Yves.
Thanks, Yves.
Our next question comes from Elodie Rall, from JP Morgan. Elodie, your line is now open.
Oh, hi, good morning, everyone. I'm sorry to come back on guidance, but I think last year, at this time of the year, you gave a guidance on Q1. So I was wondering why this time you didn't, if there's any specific clouds or, you know, what's the uncertainty there versus last year that prevents you from giving a more clearer guidance?
I think this time last year, I think there was deep uncertainty as we moved into 2023, and we just felt at that stage it would be helpful just to give some context, trading context. I mean, in terms of Q1, this year, we've outlined generally in the statement that, you know, seasonal factors were at play this year, more normal winter conditions in Europe and the U.S. But last year would have been atypical. We wouldn't have generally given specific Q1 guidance. So I think last year was the outlier, as opposed to this year being different.
Okay. Thank you. And would you be able to give us a bit more color on the trends in data centers, warehouses, non-residential, basically?
Well, non-residential, obviously, is much more broad in scope than just the data side. Like, I think on that side, we see obviously a very encouraging trajectory, not just in the amount of build, but in our portion of the technology that's going to be getting into those buildings. So that's, like, a lot of our growth is going to be coming from greater share of wallet rather than necessarily the build increase. And generally speaking, I'd say the non-residential side has been under pressure as well, and may well come under further pressure this year. Let's see.
But we've been very keen to focus on sectors that are somewhat more insulated from the macro trends, such as the one we just talked about.
Okay, thank you. And maybe a last question on margins. I think you said you expect insulation margins to recover to 10%. Obviously, this subject has been impacted by weak resi trends, but there's a big divergence now with the insulation panel. So should we expect that to close and both margins to be trending in the same ballpark?
Yeah, I think the margin dynamics are different in insulation than they are in panels at this particular juncture. The key reason for that is that the insulation division faces the residential market more than any other. That's a market that has been under considerable pressure pretty much everywhere. So we've had to suffer the operating leverage impact of that. All that being said, we'd like to think the 9.5% that we recorded in 2023 is a trough. And we, you know, we're positioning ourselves for some improvement in that as we move through 2024. You know, back towards 10%, I mean, that we've said before, you know, 10% really is in not only our insulation business, but in other categories, remains the medium-term goal. But I think we can get back into that zone in 2024 in insulation.
Okay, thanks very much.
Thanks, Sally.
Our next question comes from Cedar Sheridan, from Morgan Stanley. Cedar, your line's now open.
Thanks very much. Hi, everyone. I've got a question just on your comments on price increases. So if we look at spot steel and chemical inputs, they seem to actually be declining in Europe or at least showing no signs of any real inflation. So the question is: Would you try and push price increases in your panels business in a firmer demand backdrop, even if you don't get an inflationary cost backdrop? And so we could actually think about margin expansion in that division. Secondly, on the roofing revenues, Gene, can you just confirm what the number is that we should be thinking about in the next five years? I think you said EUR 750 million in one answer, but then in another, you said you think you could generate sort of double that investment at revenues.
Yeah.
So just to understand the timing.
Yeah.
And then on Data and Flooring, that's obviously where the growth has been for your business as it relates to the data center in markets. Are you winning any business in your panels offering, because you have sort of a market-leading position in. I think it's your internal installation. Is that the right way to sort of refer to that product? But basically, is there any cross-selling coming through? Are you winning panels business because you're winning business in the Data and Flooring division? Thank you.
Yeah. So on the pricing and panels, Cedar, it's you know, right now, with the I guess, the macro environment, we wouldn't see an opportunity, bar it being a new technology or a differentiated product, clearly, we wouldn't see scope to push prices outside of an inflationary cost environment. So, and in terms of the trends you're seeing, or the indicators you're looking at, well, that's great. If there is no increase, that's also fine. But we actually do anticipate some, but nothing like what we experienced in the not too distant past.
And just to clarify the numbers: so we think around EUR 750 million of revenue will be achieved within the next five years, for that EUR 750 million investment, and thereafter, longer term, building up to 2x that. So in terms of a greenfield investment of 750+ , sorry, including some of the bolt-ons, we'd estimate that revenue would be about 2x that over the longer term. And we can't just magic ourselves into that position clearly, it's going to take time. And then on the third point, cross-selling, I wouldn't say necessarily cross-selling. I would say a lot of sharing of a lot of sharing of projects and contacts, and pipeline between the different businesses on data.
Yes, like in essence, we literally get the flat roof insulation, the external walls, the internal clean room, and naturally all of the Data and Flooring solutions going into the building. So like, in total, it's a very significant opportunity for us in terms of the amount of product sale we can get into a single building.
And just to confirm, all that other insulation that you're selling, so the flat roof and the internal wall insulation, that would sit in the insulation business rather than the...
Yeah
... data and flooring. Okay.
Yeah, yes, absolutely. They're very distinct product offerings.
Great. Thank you for the help.
Thanks, Cedar.
Thanks, Cedar.
Our next question comes from Yassine Touahri from Unleashed Investment Research. Yassine, your line is now open.
Yes, good morning.
Hi.
Maybe a first question on your acquisition on the acquisition impact in 2024. Can you give us a bit of more color about what you expect with this stone wool acquisition, BACHL? And what kind of impact do you expect on sales and on trading profit, or just a range would be very helpful. Also, could you give us an update about the situation with Nordic waterproofing? I think the board of Nordic Waterproofing is asking for a higher price. And then the last question, which is a bit more of a question about last year, could you just help us at the full year level to give us the split between volume and price for boards and panel? That would be, that would be also very helpful.
Thanks, Yassine. I'll take a couple of those questions. Firstly, on acquisition scope, the most significant item would be the impact of STEICO, which we completed in the very early part of of January. If we look at STEICO consensus for 2023, broadly, revenues of EUR 370 million and trading profit of 30. So you know, we ought to - that's the run rate as we head into 2024.
The stone wool investment, I would say it would have a modest impact on earnings in 2024. And beyond that, beyond that, acquisitions that we completed in 2023, given their timing, it won't really have much of a run rate impact as we move through 2024. So the key item at this stage really is STEICO. As regards to kind of price volume dynamics, they're set out pretty clearly for insulated panels, H1 versus H2, in the statement. In boards, given the mix of products and categories that we have within— Sorry, in insulation, given the mix of products that we have within that division, it makes little sense for us now to split out volume and price.
Underlying sales were down 9% across the year. Thematically, what I would say is volumes were down more in the first half than they were in the second half. But overall, underlying sales were down 9% in insulation across the year.
Then on Nordic, Yassine, it's, you know, it's - first of all, it's got to get through the antitrust process, which, seeing as we're not really in that business, shouldn't be an issue, but that takes a lot of time. And there's little more to be said on the number. So we made an offer which the board didn't support, and it'll go to shareholders eventually, and let's see what happens.
Thank you very much.
Thanks, Yaseen.
Our next question comes from Alexander Schermer from Kepler. Alexander, your line is now open.
Alexander Schermer speaking from Kepler Cheuvreux. So, yeah, just one question or two questions. One would be if you could maybe give some extra details on the capacity utilization in the panel business. Considering your solid margins in the second half, I can only imagine that you work at a high utilization rate. My estimate would be somewhere between 85%-90%. Does that sound about correct? And maybe if you could provide a split between Europe and US. And then the second question would be on the Karl Bachl acquisition, so on the stone wool.
You mentioned that you, it's been somewhat of a gap in your strategy, so could you maybe, can we expect more acquisitions in this space, or would you, maybe, consider greenfield investments, more? And if the former, there's a large colleague of you that is quoted at somewhat multiple that is typically done by you if you do acquisitions. So I was just wondering if you maybe see some opportunities there.
On the utilization question, Alexander, I'd say, like, first of all, it's really very local. You know, we would have some very highly utilized facilities and some much lower. Like in the round, it's probably something like 65%. But honestly, it's not a meaningful figure when you take it from a global perspective. In terms of BACHL, like, it's a first entry, it's a gap, like we said. We see it having its appropriate fit within the organization as part of the spectrum. Will it lead to some further moves? I would say definitely, is the answer to that. What shape that takes, let's see as time evolves.
I didn't quite get the last point you made.
The second question would be if, because you're looking to stone wool, which was somewhat of a gap in your strategy...
Yeah.
Can we either expect more acquisitions in this space or rather greenfield investments going forward? Are you looking more at, yeah, your own capacity, or are you really looking forward to make heavy investments in this space?
So yeah, the answer is still the same. And yeah, it's not for internal supply, it's to enter the space.
Okay. Thank you for that.
Thank you.
Thank you.
Our next question comes from Jonny Coubrough from Nomura. Jonny, your line is now open.
Thanks very much. Just keen to hear about mix dynamics and the impact on the margin, potentially in FY 2024. You pulled out market mix helped last year. Within that, also, what you're seeing in the U.S. at the moment, and whether you expect megaprojects continue to be, you know, a large part of mix this year?
Sorry, Jonny, just. Is the question on margin? I didn't quite get the-
Yeah, exactly.
Yeah, I mean...
Yeah.
Overall, just given the mix of markets that we're in, mix of categories that we're in, the 10.8% that we made in 2023, you know, ought to be a reasonable target for the year ahead. Thematically, Insulated Panels made 12.2% in 2023. That could be a touch lower. Insulation, as we mentioned earlier, at 9.5%, perhaps some scope there. Roofing and waterproofing, we've been progressing that steadily. Light air and water, we've been on a path over the last number of years of solid progression each year, and, you know, again, we'd be targeting that for this year.
So there's several moving parts, all of which ought to combine to give us a trading margin in the, you know, mid to high tens.
Okay, thank you.
Thanks, Johnny.
Our next question comes from Rajesh Iyer from HSBC. Brijesh, your line is now open.
Hi, good afternoon, good morning, sorry. I have two questions. The first one is on the foray into stone wool. Should we look at it as a it's a - because historically you have been a big consumer of stone wool for your insulated panel products. So when we look at the future, is that to be restricted to insulated panel, or you are looking to be kind of expanding the board business and looking to put stone wool therein as well? And the second question is more about Grenfell, whether you have any update to share. We did see some news earlier in the year about a settlement. Any update there would be great.
On the mineral fiber side, yeah, it will be two or even threefold. Like, because obviously the internal consumption, which will not be the priority. So we expect to be selling the product through our insulation channels, and indeed through our roofing channels, as well as part of, as we keep saying, that a full offering. So we'll be able to offer the widest combination of different insulation and roofing solutions to the market. That's what that's about. In terms of Grenfell, no, we've no update whatsoever.
Understood. Thank you.
Thanks, Rajesh.
Our next question comes from Harry Sheridan from Berenberg. Harry, your line is now open.
Yeah. Hi, good morning. My question is around the organic ex-CapEx expansion program, please. I guess, firstly, can you remind us what we should expect in terms of sort of incremental contribution to revenue in 2024 from new assets that were opened in 2023? And more generally, what we should think about the contribution over the medium term. And then the second one around that is, when you're thinking of new regions to expand into or new CapEx programs, are you thinking expanding more into sort of the newer geographies, the Brazils, the Colombias, the Paraguays, for example, or are you thinking about, you know, incremental new countries to enter into? Thank you.
Yeah. The capacity expansion is set out, Harry, on page 12 in the deck. I mean, we expand capacity for a number of reasons, both for the short and indeed the longer term. Different markets are, you know, running at different speeds. We've had really strong growth, for example, in insulated panels in the Americas, so naturally you'll see that feature fairly prominently in our capital plans. Data and flooring, as we've highlighted, we've got significant ambition there as we go forward, and that features in our CapEx plans. So, you know, there's different reasons for individual CapEx projects.
As we've outlined as well with the growth that we've seen in insulated panels of 8% in the second half of the year and trending positively as we go into this year. Some of our capacity plans will help that. But it's not possible to kind of prescriptively give you what last year's CapEx amounts to in terms of 2024 sales. And we expect to, as I say, commit another EUR 250 million organically this year. And that's to support the ongoing advancement in the growth of the business. And, you know, again, there's another slide in the deck, which points out the growth of the business over time, and our capacity plans naturally are supportive of our future plans.
Okay. Thank you.
Thanks, Harry.
We currently have no further questions, so I'd like to hand the call back to the room. Thank you.
Thanks, Bruno.
Thanks, Bruno, and indeed, thanks everybody for joining the call, and we look forward to speaking to you over the next few days.
Thanks.
Thanks, everybody.