Hello and Welcome, everyone, to the Kingspan Half Year Results 2025. My name is Becky, and I'll be your operator today. During the presentation, you can register a question by pressing star followed by one on your keypad. If you change your mind, please press star followed by two. I will now hand over to your host, Gene Murtagh, Group CEO, to begin. Please go ahead.
Thank you, Becky, and good morning, everybody, and Welcome to our H1 Results call. Lots to get through today, so we'll take you, first of all, to slide number three, please, titled H1 2025 in summary. Just on that, our revenue came in 8% ahead of prior year at EUR 4.5 billion, trading profits up 5%, EPS at EUR 1.72 is up 4% on a pure basis. As always, on our greenhouse gas emissions, tremendous progress, down 63% in real terms versus 2020. In terms of just picking out some of the kind of key points of the first half, I think it's important to point out that it has been and continues to be a pretty unforgiving environment. I think in the context of that, our catch-up in the second quarter really reflected quite a resilient performance versus what was a very slow start to the year.
Our reported margin is down slightly to 9.8%, but in fact, that masks what is an underlying increase in the margin by 20 bps. The dilution relates, in large part, to Nordic Waterproofing, which is a heavily second-half business. That was pretty predictable, and we would expect it to deliver much more strongly, obviously, in the second half, but we have to bear that in mind for next year as well. It's a big business, and it's highly seasonal, so that's really the issue around the margin reduction. We've introduced two new segments to replace what was five. This really is to reflect increasingly how the business is being run and the closeness of what were those older segments in terms of how that's going to function going forward. In summary, there, the Insulated Panels business revenue increased by 8%, which was largely around acquisitions, including Nordic Waterproofing.
The Advanced Building Systems business grew strongly, largely around the continued progress in the data center segment. Revenue there grew by 12%, and that was largely organic. We've announced this morning as well a share buyback of up to EUR 650 million over the next 18 or 24 months. That doesn't interfere in any way, to be clear, with the development agenda that we've been pursuing forever, basically. Our pipeline on that front continues to be as full and healthy as it's ever been. In terms of investments made in the first half, EUR 400 million was the total in both acquisitions and organic CapEx. On the acquisition side, the chunkier parts of that really was the continued purchase of Steico shares and the earnouts, and also just finishing off on the acquisition of Nordic Waterproofing. Then ongoing bolt-on, some of which we've even announced since the period closed.
That's it in a nutshell, and then I'll hand you over to Geoff.
Thank you, Gene. I'm moving to slide 13, financial highlights. Group revenues a bit lower, EUR 4.5 billion in the first half, up 8% at a headline level. Our constant exchange rate's up 9%. Trading profits of a little under EUR 443 million, up 5% or up 6% at constant exchange rates. Earnings Per Share progressed by 4%. The interim dividend is in line with the first half of last year. I'll come to the constituents of cash flow shortly with a modest free cash outflow in the first half of the year. The group's trading margin on a reported basis is down 30 basis points, but actually, the like for like trading margin, as Gene outlined, is up by 20 basis points, with the reported margin solely being down due to the initial consolidation of Nordic Waterproofing in the first half of 2025.
Our net debt at the end of June stood a little over EUR 1.9 billion, and I'll come to the debt movements in a second. Our net debt to EBITDA 1.74x , so comfortably in investment-grade territory. Moving to slide 14, just to bridge sales and profits in the first half, currency was a modest headwind in the first half. That would be a steeper headwind, which is baked into our guidance, but the steeper headwind into the second half, given the exchange rate movement since the beginning of the year. Acquisitions contributed EUR 358 million of revenues half year on half year, and you'll note from the right-hand side of the page, net they delivered a little under EUR 17 million of profits in the first half.
Initially dilutive, clearly over time, they'll progress, and it also reflects a strong element of seasonality, particularly in the Nordic Waterproofing business, which is a significant component of the acquisition sales. Underlying sales modestly ahead in the first half. From a profit perspective, you'll see the currency was a headwind of about EUR 3.5 million. We would estimate that would be closer to EUR 20 million on a full-year basis for FX in 2025 versus 2024, and that's factored into the approximate EUR 950 million that we've guided. Underlying profitability up slightly year on year contributed about EUR 8 million additionally to profitability. From a geography perspective, that's set out on page 15. No significant change in the geographic profile of the group, first half 2025 versus first half 2024. You'll note that Central and Northern Europe are up by 15%, and that largely reflects the consolidation of Nordic Waterproofing.
I'd also draw your attention to the difference between the absolute change and the constant currency change in the Americas. At a headline level, we were ahead by 13%, but on a reported basis, ahead by 9%, and that's reflective of exchange rate movements in the period. Trying to cut free cash flow on page 16, as I say, a free cash outflow in total for the first half, it's worth highlighting that cash generation at Kingspan is typically very second-half weighted. Our working capital position is higher in June than it is in December. Our working capital outflow was EUR 288 million in the first half of this year. The working capital to sales ratio at 13.1% was 120 basis points higher than the June position of 2024. We fully expect that to unwind in the second half.
There'll be a reduction of or an inflow of EUR 150 million on the working capital line in the second half associated with that. It's just a point in time. Our net CapEx organically was EUR 152 million in the first half, and our CapEx guidance for the full year is EUR 320 million. Tax was an outflow of EUR 69 million in the first half, which was EUR 40 million lower than in the first half of last year. Reconciling net debt on page 17, the combination of acquisitions and deferred consideration was EUR 246 million. That, as Gene outlined, was taking the full ownership stake of Nordic Waterproofing, buying an additional 10% of Steico as well as completing the earnouts in respect of Steico. Dividends EUR 52 million. Net debt ending the period of EUR 1.915 billion.
Ignoring development, our plan is that we would have a net debt figure pre-development and pre-buyback of EUR 1.5 billion by year-end. We expect to generate significant cash into the second half of the year. The strength of our balance sheet is highlighted on page 18. Net debt to EBITDA 1.74x . We have an EUR 800 million green revolving credit facility with a syndicate of global banks that's fully undrawn and committed to May 2028. We've outstanding private placement loan notes of EUR 1.477 billion, and our daily public bond EUR 750 million. The weighted average maturity of all of our outstanding debt is a little over four and a half years. Our total available liquidity between cash balances on hand and committed undrawn lines is about EUR 1.4 billion. That gives us plenty of development headroom.
The long-term value creation at Kingspan is set out on page 19, which plots the uplift in revenue, profitability, and earnings from 2014 through to the end of last year. Now, it is worth emphasizing that the guidance that we've issued for the first time this year is the first time we've actually prescriptively given guidance for 2025. If we deliver that, it'll be another record year for the business, notwithstanding difficult end markets that we're currently seeing. Back to Gene.
Excellent, Geoff. Thank you. We're moving now to slide 22, which is titled Outlook. Essentially, things have firmed up, as we highlighted earlier, from a very slow start. It's far from exciting, we'd have to add. As you said, it's still a relatively tough trading environment, but we expect the insulated building envelopes business to continue to benefit from structural growth as massive construction moved towards more energy-efficient systems. That's been clearly evident over many years and is continuing. The advanced building systems is probably going to accelerate in terms of its growth and opportunity, in particular, capitalizing on the tech sector as it seeks out really the best-of-breed solutions for hyperscalers worldwide. We're told we're very well connected into that whole segment, as you know, in fact, right across the product offering.
I think very importantly, the backlog across the major businesses is ahead of the same point last year, which naturally does point towards a stronger second half and a second half which will be stronger than prior year as well. The exchange rate environment is very difficult to judge. It's up and down by the week. So far, that's worked against us. Let's see how that pans out for the remainder of the year. Our best assessment of the outcome for this year as a whole is an operating or a trading profit of in or around EUR 950 million, which if we get there is about a 5% improvement over 2024. That's it in summary, essentially. Now we're open to whatever questions you may have, Becky.
Thank you. If you wish to ask a question, please press star followed by one on your telephone keypad now. In the interest of time, we ask today that you limit yourselves to two questions per person. If for any reason you want to remove your question from the queue, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Shane Carberry from Goodbody . Your line is now open. Please go ahead.
Thank you. Good morning, Gene and Geoff. The first question, just if you could expand a little bit on what you mentioned a moment ago, Gene, in terms of the advanced building solutions opportunity. Could you just talk about how the product set has been evolving there and how we should think about the product set evolving into the future? The second is, I guess we haven't caught up since you made the decision to enter into the shingles market in the U.S. Could you give us a little bit more color around the rationale for that, how we should think about the competitive dynamics in that market as well would be really helpful.
Sure, Shane. Just on the advanced building systems, obviously, it's a very wide product portfolio, which is increasingly becoming exposed or exposing itself to the tech sector, which is obviously accelerating at a hell of a pace. As that accelerates, essentially, the demand for energy conservation or management of heat becomes intensified, largely around AI, which creates basically multiples rather than percentages higher of the heat. As a result of that, the solutions have to obviously be able to deal with that. We're increasingly involved in air management within data centers. We went from floors into stick-built racks into modular racks, now significantly into air movement around data centers. We're going to increase our exposure there pretty radically over the coming years.
In terms of liquid cooling around this, you've got liquid cooling of the racks and you've got liquid cooling direct to the racks themselves, which are at the very early stages of entering. All of that really presents a very, very significant opportunity for the group. Essentially, that's the direction of travel on that whole side of things. On the shingles market, it's basically part of our whole roofing approach to North America. I think we've been pretty clear about what we're doing on the commercial side, which, by the way, is advancing very well. The plant in Oklahoma and in Maryland. We're becoming increasingly encouraged by interaction from the market and the appetite for Kingspan to enter the business there. Shingles, as you know, is really around the residential opportunity. It's a highly consolidated, dense market, and we see an opportunity to basically enter by building.
Clearly down the line, that may lead to some activity beyond the build itself. It's a very resilient market. It's probably 80+% of the refurb. It's got clear attraction, and therefore, we're going to have a go at entering it.
Really helpful. Thanks.
Thank you. Our next question comes from Cedar Ekblom from Morgan Stanley. Your line is now open. Please go ahead.
Thanks very much. Hi, gentlemen. Can you talk a little bit about the largest business within the group, which is the panels offering? Maybe you can give us a little bit of detail on how you've seen your pricing order intake develop in that product segment, and maybe a bit of color across the regions, Europe versus U.S. If we look at the key raw material inputs for that product category, we're not really seeing much inflation. I know that there's been some ambition to increase steel prices in Europe, but those don't seem to have stuck in the last couple of weeks. Can you give us a little bit of visibility on how we should think about the pricing and volume trends for that product category into the second half, and also how we should think about margins? Thank you.
Yeah. Just like broadly on the intake side, we're up 5% or 6%. That's on a like-for-like worldwide. All of that actually, given the fact that absolute construction is clearly negative in most markets, is pretty encouraging. Our order bank, as I said, is up encouragingly for the second half of the year as well. Now, it's obviously a different story, an erratically different story by market and by country. Probably we've seen the U.S. has had strong activity, strong order bank, but it's not as urgent in terms of delivery requirements as we'd like to see it. Latin America is powering ahead, and much of Europe is reasonably encouraging, actually, probably outside of the U.K.. From a pricing perspective, I think stable is pretty much as we find it. You're right. There have been attempts to push steel ahead in Europe that are definitely faltering.
We don't expect steel going up in the near term. We've obviously got the whole chemical side of things as well, which varies a lot by geography, too. From a pricing perspective, there is, and is going to be more cost and, as a result, price inflation in North America. That's happening for obvious reasons. As always, we expect to be able to push that through and hold our margins pretty much around where they are now.
Thank you. Our next question comes from Allison Sun from Bank of America. Your line is now open. Please go ahead.
Hi, morning. I have two questions. First, on this EUR 950 million guidance for the full year 2025, how should we think about the margin implied by this one? Number two is on the share buyback. I wonder if there's any, I don't know, like pace you guys are expecting. Should we think it's a steady share buyback or maybe there's some acceleration? Yeah. Thank you.
Thank you, Allison. Firstly, on margin, what the approximately EUR 950 million trading profit implies is a group trading margin north of 10% in the region of 10.2%, 10.3%. It is very hard to be specific beyond that. We expect insulated building envelopes to nudge a little over 10%, and advanced building systems ought to be at around 11%, just given the growth in that business that you'll have seen in the first half, which will continue into the second half. We mightn't reach the 10.5% that we had at a group level for 2024, but we'll be north of 10%.
On the buyback, it's very difficult to predict. We judge that as we go along. It may be steady, it may be lumpy depending on how the stock's trading and what lumps are out there. Just to be clear about this, it doesn't interfere whatsoever with the development agenda that we've had for a long time and will continue to have, obviously, outside of anything very significant. Our thinking around it all is, essentially, we're buying and continue to buy assets in or around the rating that the group is at. Obviously, we know Kingspan better than we know anything else. We're the best asset in the sector worldwide, and that's essentially our interest in doing it. Before anybody goes there, have we run out of ideas? Absolutely, far from it. We have tons of ideas beyond this.
Thank you. Our next question comes from Elodie Rall from J.P. Morgan. Your line is now open. Please go ahead.
Hi. Good morning. Thanks for taking my questions. I'll follow up on the buyback, first of all. I was wondering what drove the rationale for the decision. I mean, you seem quite confident about the growth pipeline, but is this really as do you see as much growth as you saw in the past? Maybe you can elaborate a little bit on what you see in the pipeline going forward versus what you've done. You've said that net debt to EBITDA is expected at 1.5x by the end of this year, pre-development, pre-buyback. Where would you be comfortable to bring that leverage ratio to adding acquisition and buyback? That's my first question. Just on housekeeping, could you give us the scope for the full year that you expect the scope intact and maybe our top year? Okay. Thanks.
Thanks, Elodie. Firstly, on the buyback, deliberately, it is over an 18- 24-month period. We have a, as Gene has outlined, a very healthy and full development pipeline. I'd highlight that we invested EUR 400 million in development in the first half of this year alone between M&As and organic CapEx and acquisitions. That pipeline remains healthy. From a balance sheet perspective, pre-development and pre-buyback, we expect our net debt to be about EUR 1.5 billion at year-end, which actually is leverage of somewhere between 1.2 and 1.3x . That gives us significant balance sheet headroom to be able to develop the business and indeed progress the buyback sensibly. We're strongly committed to our investment-grade credit rating. We're highly cash-generative. We have a pretty low dividend payout ratio as well. The lion's share of our cash flow is going to be invested in continuing to develop the business.
I think all of that is highly relevant in the context of how we progress both as we go forward. From a scope perspective, we expect the M&A scope to deliver somewhere between EUR 35 and EUR 40 million of profitability in 2025.
Great. Thank you.
Thanks, Elodie.
Thank you. Our next question comes from Flor O'Donoghue from Davy. Your line is now open. Please go ahead.
Thank you. Good morning, everyone. My two questions are as follows. First one is, I might just ask on the data center side on capacity. Is there a risk of being capacity constrained? Just your latest update on capacity expansion projects, etc. The second one is, I might just ask on U.S. roofing, just the initial feedback you've been getting from distribution partners or potential partners, and maybe how you feel about the product and how you're going to differentiate the offering this time next year once you're fully up and running with the new plans.
Okay, Flor. On the data capacity, I suppose the great problem we're having is that we're constrained, if you want to call it that, by the speed at which we can actually build capacity. That's really a super problem. It's worldwide, but I'd say it's largely around North America in terms of just the intensity of that constraint. The plant that we opened in the Northeast last year is literally full to the rafters 24/7 already. We started production in Arkansas, which is running on a full single shift now, and actually, demand is there to fill that completely 24/7 as fast as we possibly can. We're now scoping out another location in the U.S. Clearly, beyond that, we've acquired the RXL business in California, which product-wise brings us into a new segment as well as giving additional capacity.
The same is happening in terms of expansion across Europe and Asia, where we expect to start production very shortly in Vietnam. That's to complement everything we're doing in Australia. It's really very exciting. As I said, as fast as we can build, we can sell. That's not an issue at all. From the U.S. roofing perspective, first of all, the feedback gets more encouraging by the week. We're having engagement clearly with specifiers, with roofing and main contractors, and obviously with the distribution base, which in itself is actually going through a period of disruption. I think that will become more and more disruptive as time goes on. That whole environment kind of works for us. As I said, the feedback has been extremely encouraging. In terms of differentiation, we'll have kind of product and offering differentiation.
Our focus is going to be on TPO and polyiso boards as well as some other insulation types. After that, PVC membrane. We're staying away entirely from EPDM, which is a declining part of us. Obviously, bitumen isn't of interest to us in the U.S. We're going to be introducing a QuadCore-based board as well beyond the PIR. That will be fundamentally differentiated from thermal, fire, circularity from all the existing products that exist in the market. That's probably 18 months away before we get at that, but very clearly on our agenda. We would expect it to become a very sizable portion of the business the same way that it has the Insulated Panels offering. More widely than that, Flor, there's the opportunity to do like America likes warranted systems. Roof packages is typically how things are approached. It's sold as a full warranted system.
We see the same on the insulated panel and basically on wall and facade applications. We will very quickly be moving towards a combined offering of roof and wall and essentially offering the building owner a complete warranty on the envelope. That in itself will be wholly differentiated from anybody else in the market and, frankly, the biggest opportunity we see in the U.S.
Great. Thank you very much.
Thank you. Our next question comes from Alexander Craeymeersch from Kepler . Your line is now open. Please go ahead.
Good morning. Thank you for taking my questions. The first one would be that you mentioned some Western Europe as being short-term attractive, but yet you don't really see a significant growth in the first half of the year year-on-year. What gives you the confidence to make that statement? Is that like the order book? Is this just a general perception? The second question would be on the cautiousness of North America, where you say basically on the short term, it's optimistic but not flagged as such. I'm wondering why there is that cautiousness embedded in that outlook. Is that only related to the FX headwinds, or do you also see a change in order books? Thank you for that.
In terms of the Western European markets, Alexander, it's very mixed. Like Germany and France, we'd be quite encouraged by an improvement, as we've highlighted in Central Europe. The U.K. is not surprisingly in an increasingly negative place, I would say. In Iberia, where we've got a very strong and growing position, that's actually going very much in the right direction. It's kind of very mixed. On the whole, we wouldn't feel too bad about Europe in general. That's without getting into the nitty-gritty of all the different product areas. In the U.S., the issue in the U.S. is you've got a tech-related segment, which is utterly detached from the realities of normal, normal regular markets. It's just firing ahead, as I say, at a totally unbridled pace. You've got the regular business, which is very shaky in general, never mind Kingspan.
I think that's clear from all the indicators and reports that you would see. Essentially, that just comes down to the level of uncertainty that there is in the market. That's all we're seeing, basically.
Great. Thank you.
Thank you. Our next question comes from Pujarini Ghosh from Bernstein . Your line is now open. Please go ahead.
Hi, can you hear me?
We can.
Thank you. Going back to the U.S. roofing market, you're expanding greenfield, and you'll have some components of the entire roofing system, as they call it. What are your plans of trying to get all of the elements that are required for the system selling? Do you plan to, over time, build up all of these elements on a greenfield basis as you're doing now? Potentially, down the road, do you think there could be opportunities of acquisitions as well? That is obviously something that you've done very well in the past in other parts of the business.
In terms of the offering, it's kind of like we highlighted before. It's around membrane insulation, vapor barriers, and the accessories that go along with all of that. It's focused on TPO and PVC membrane as the outer layer. We're brownfielding these in Maryland and Oklahoma and likely in Georgia next. In terms of the opportunity for acquisitions, yes, those exist. Some of them are reasonably large scale, but plenty of bolt-on opportunity around the edges to enhance the overall offering that we'll be bringing to market. I think it's going to be a combination of, and as you rightly point out, we've been successful in bolting on acquisitions into the business, and we expect to do the very same in this sector in the U.S.
Okay, thank you.
Welcome.
Thank you. As a reminder, to ask a question, please press star followed by one. Our next question comes from Yassine Touhri from OnField Investment Research. Your line is now open. Please go ahead.
Thank you very much for taking my questions. First, on your roofing expansion in the U.S., I understand that you're starting one plant in early 2026. You've got a target of $0.5 billion. Do you have any view of how much you can generate of this $0.5 billion in 2026? Is a couple of hundred million dollars realistic? The situation, I also understand that you're talking about QuadCore. Is QuadCore something that would be attached to a membrane, or are you really targeting the world market and trying to replace the traditional insulation with fiberglass in the U.S. with boards? Maybe a follow-up question on the market. I understand that the data center market is doing extremely well. Is there any way you can quantify the exposure of the group?
If you can give a bit more color on the other market, like warehousing, I understand was under pressure, but maybe stabilizing distribution logistics. It would be great to get a bit of a feel about where we could see a recovery after the uncertainties on trade abate.
Yes, about a half billion dollars. By the way, that's just the first two facilities. That doesn't include the shingles plant. We're making very good progress on scoping that out, actually, right now, literally right down to site selection. On the industrial roofing side, we will get going early 2026. In fact, we'll be making products late 2025. That has to go through commissioning and testing and all the rest. $200 million is absolutely achievable in year one. The QuadCore offering, as you highlight, that's really coming. That's going to be in 2027. We're going to produce polyiso boards straight away. In fact, we'll be producing it before membrane. The QuadCore offering comes thereafter, and it's very specifically around an upgraded conversion from polyiso insulation in the flat roof. We're not targeting QuadCore in an insulation board against fiberglass in walls. That's not what it's about.
It's about upgrading the flat roof offering.
On your question around the data center category, clearly, it's a very strong category globally, but it's still registered at a group level. It's still a single-digit % of our group sales.
Growing very, very rapidly.
Do you see the other market? I think a lot of investors are trying to understand what could be the trigger for people that are holding on their decision to invest in, I don't know, warehousing, cold storage. What could we watch, and what could be the trigger of a recovery, and what could be the timing?
It's geopolitical stability and some certainty around what's happening in Ukraine, in particular around how that's affecting Europe. They're the things that will trigger decision-making and activity. Frankly, outside of that, I wouldn't expect anything to change.
Thank you very much. Yeah, thanks, Ellis.
Yeah. You know we can only influence what we can influence. We'll continue to develop and grow the business as we've outlined. I thought the other point worth highlighting before we wrap is on PowerPanel. It's pleasing for us to note that we've 30 million meg of projects specified.
30 meg.
Sorry 30 meg.
That's the plan.
30 meg specified. You know, very early and encouraging progress on that front. That's just in two markets.
Yeah. Thanks.
Thanks,
Thank you. As a reminder, to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. We currently have no further questions, so I'll hand back to the management team for closing remarks.
That's excellent. Becky, thank you all for joining. We'll be speaking no doubt to you all individually over the coming days and weeks. Take care.
Thank you, everybody.
This concludes today's call. Thank you for joining. You may now disconnect your lines.