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Murtagh's vision sees high-flying Kingspan extend its wing span
John Mulligan



Spanning three continents, the building products "rm is a true Irish success story, and under its ambitious . . . if media shy . . .chief executive there are plans for a renewed assault on the US

GENE Murtagh rarely speaks to the media. Willingly, at least. He's more of a heads down, below the parapet sort of guy.

But as chief executive of Cavan-based insulation and building products firm Kingspan, the 35-year-old (and youngest chief executive of an Irish publicly quoted company) rates highly among the investment community.

Just recently, Murtagh . . .whose father, also Eugene, is Kingspan's chairman . . . was recognised with a business award by his alma mater, the University of Limerick, where he studied business and graduated in 1993.

Since then he's been involved in the Kingspan business, working his way through various divisions before eventually being appointed chief operating officer in 2003, and then taking the hot seat in 2005. The lengthy tour of duty has served him well. One analyst remarked that Murtagh displays a sharp insight into the group's operations, which at this stage expand across three continents.

Kingspan is one of those companies that, despite its almost 3bn market capitalisation, is unlikely to surface in a straw poll among clientele down the local pub as an Irish success story.

But it has been among the top three performers on the Irish Stock Exchange in recent years and ahead of the curve in terms of product development that delivers high margins and keeps it one step ahead of the competition.

Perhaps the only real black mark to have been put next to the report card was Kingspan's acquisition of USbased Tate Flooring for $120m in 2001. Tate, which manufactures raised flooring, was counting on sales to technology companies that were already on the ropes.

Contracts that were seen to be all but secured never materialised. That prompted court action from Kingspan and it eventually received a $44m arbitration payment.

At that stage it must have been very tempting to take Kingspan private, as the market perception . . . and the share price . . . simply didn't tally with what management thought the company would deliver.

"There would have been a lot of debt to play down after a buyout, and instead management realised they'd get it right and that the market would see that, " said analyst Florence O'Donoghue with Davy Stockbrokers.

"By staying in the market it had the ability to pursue things that might not have been possible if that debt was there."

But even before Tate derailed the stock performance, Kingspan already had its sights set on new growth areas. Under the stewardship of Eugene Murtagh, a prescient footprint had been established in the Czech Republic. The company now has additional facilities in countries such as Hungary, while its recent acquisition of a 51% stake in Turkish panel firm Izopoli will help it extend its reach in the region. It has also made a foray into Australia.

"You can have volatility in countries such as Hungary, but you have to imagine that over time they're going to be pretty good places to operate in, " commented John Sheehan, an analyst with NCB.

"There's a lot of foreign investment going in and a lot of EU money will go in too."

Kudos also continues to be attributed to the young chief executive for his measured expansion approach.

"He has a very deep understanding of all the operational aspects of the business, " said Sheehan.

"He's not afraid to take a chance, but Kingspan has always been a firm that was able to identify which way the market and regulations are going so that's it's ahead of the game." Among Murtagh Jr's more lateral moves was the acquisition of Monaghan-based Century Homes last year for almost 100m.

The builder of timberframed homes has a domestic edge in an environment where close to one third of all homes built in Ireland are now timber-framed. In the UK, the percentage is significantly less and so offers Kingspan an opportunity for some serious growth. Units being built at Monaghan already emerge from the factory gates with Kingspan insulation products already installed.

Kingspan has already signalled its intention to reexamine the US market. With loose building regulations and low-level use of insulation products, it has the potential on paper to be a massive play for the Cavan firm. But don't expect Kingspan to be in a rush.

John Mattimoe, an analyst with Merrion Stockbrokers, said that while the US has been perceived to be the "great white hope" for the insulated panel business, Kingspan will be engaged in some very careful planning before it makes any big move.

Its experience with Tate has also provided some valuable lessons in terms of how to . . . or how not to . . . go about a US acquisition.

"Two things have always made people circumspect about how important the US is for Kingspan, " said Mattimoe.

"One is whether the American market is ripe for conversion from a lower standard product to the type of product Kingspan manufactures, and secondly, what the entry route to market would be."

Mattimoe added that Kingspan's management has learned a lot about doing business in the US and that its next move into the US will be "very well thought through".

But speculation now is that maybe the US is ready for Kingspan. The company has already indicated `a renewed focus on possibilities there.

While Kingspan could make another acquisition in the US, the intention has always been to rely on organic growth.

"Murtagh doesn't see Kingspan becoming an acquisition machine like CRH, " said Mattimoe.

In the meantime, Murtagh, just like his father, stays out of the limelight and well insulated.

But as Kingspan continues to grow he may find it that bit more difficult to retreat from the spotlight.




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