Mannok margins rebound as energy investments start to pay off

Financial results announced on Thursday show turnover last year was €311.9m, down slightly on 2022 but the group said that was largely thanks to deflation for insulation and plastic packaging products.

Earnings, calculated using the Ebita formula, were up significantly to €44.9m, well ahead of 2022’s €25.8m.

That better result reflects margin recovery. The business had to absorb less of the inflationary pressures that hit construction materials and energy bills in 2022. The group also saw gains in 2023 from previous investments in carbon reduction initiatives.

Mannok’s two main divisions are building products and packaging. Its key activities are the energy intensive manufacture of cement, concrete, quarry and aggregate products and insulation materials, as well as the manufacturing of packaging products, mainly for the food industry, focussed on the island of Ireland and UK markets.

The group said investment in sustainability is now Mannok’s number one priority from both an environmental and commercial perspective, noting that investment to date has been strongly margin enhancing.

Final commissioning of a Fuel Flex installation at its cement plant, designed to reduce coal consumption, was completed in March. Further fossil-fuel reduction measures are well-advanced.

In Northern Ireland, Mannok has also completed a tender process for phase one of its Mannok Energy Valley project, which will produce green hydrogen for use in its transport fleet, and aims to progressively replace diesel.

Cumulative capital expenditure by Mannok since 2015 now exceeds €100m, including €12m in 2023 and a similar spend planned for this year. Debt was cut by 30pc to €66.8m.

The group announced in January that its long-time chief financial officer (CFO) Dara O’Reilly, would take over as CEO when Liam McCaffrey retires this year, and that handover is now scheduled for June 30.

Commenting on the latest results, Mr McCaffrey, said the business was seeing benefits after it supported customers through several years of oppressive inflationary pressures.

"Mannok was pleased to see margin recovery during 2023 as cost absorption pressures eased somewhat. Investments in excess of €100m in the business over the past nine years has seen a doubling of turnover and a sevenfold increase in Ebitda, while also increasing employment by more than 150 employees in the same period. This is important progress as we embark on substantial investment in decarbonisation measures during the coming years.”

Mr O’Reilly said investment in decarbonisation initiatives has resulted in continuing displacement of fossil fuels, contributing greatly to Ebitda growth in 2023.

"We see investment in decarbonisation as a multi-year process to both enhance margins and underpin planned investment of several hundred million euro over the next decade. Our near-term priorities include additional carbon reduction measures to extend our use of alternative fuels to the kiln process within the cement operation,” he said.

Since the end of the 2023 financial year, Mannok has entered into a memorandum of agreement with Hydrogen Vehicle Systems (HVS), the UK’s first original equipment manufacturer of hydrogen fuel cell trucks, to explore the integration of hydrogen fuel cell HGVs into the Mannok fleet.