Insulation industry news from Global Insulation

Ukraine: Ireland-based Kingspan plans to spend Euro200m towards building a ‘Building Technology Campus’ in Ukraine. The site will be used to manufacture insulation and district heating products. Development of the project is due to start immediately with eventually commissioning forecast for 2027. The insulation company has appointed a project team to identify a suitable site, likely to be in the west of the country, and is liaising with the Ukrainian Government. Over 600 jobs are expected to be created when the site opens.

Gene Murtagh, the chief executive officer of Kingspan Group, said “This investment sits at the crossroads of three crises: the climate crisis, the energy security crisis, and the crisis caused by the Russian war against Ukraine. The new Building Technology Campus we are planning will make positive contributions on all three fronts, supporting Ukraine as it rebuilds its economy, meeting demand across central and Eastern Europe for energy efficient buildings, and helping Europe to reduce reliance on oil and gas imports.”

Kingspan previously said it had exited the Russian market and divested its operations to local management in April 2022 following a decision made in March 2022.

Russia: Denmark-based Rockwool says that it is running its four plants in Russia as a standalone operation. However, it is continuing conducting business to avoid the nationalisation of its assets and the loss of its intellectual property. The insulation producer previously said that it had cancelled all investments in the country since the start of the war in Ukraine.

Denmark: Rockwool recorded consolidated sales of Euro924m in the first quarter of 2022, up by 38% year-on-year from first-quarter 2021 levels. The group’s earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 12% year-on-year to Euro155m.

CEO Jens Birgersson “High demand and sales price increases drove double-digit revenue growth across almost all business units. While not materially affecting sales performance at this point, the terrible war in Ukraine and the challenging geopolitical situation are contributing to an already stressed global economy. Even with the price increases, the soaring energy, material, and logistics costs diluted margins in the first quarter. This will necessitate further price increases across the businesses.” Birgersson added “We expect to restore margins in the coming quarters.”

In its Outlook 2022, Rockwool predicted full-year net sales growth of 20 – 25% in local currencies and Euro425m-worth of group investments during the year, excluding acquisitions. It says that its business in Russia continues operating on a stand-alone basis, in order to avoid nationalisation and loss of its intellectual property.

US: Owens Corning’s net sales from its insulation division rose by 23% year-on-year to US$859m in the first quarter of 2022 from US$700m in the same period in 2021. Its earnings before interest and taxation (EBIT) grew by 15% to US$129m from US$82m. It attributed this to higher selling prices and sales volumes despite inflation and higher transport costs. Overall company net sales and adjusted EBIT increased by 23% to US$2.35bn and by 48% to US$417m respectively.

The light building materials producer also said that it made the decision to end its operations in Russia in March 2022 in response to the Russian invasion of Ukraine in February 2022. It halted all future investments in the country in April 2022. In 2021 its net sales in Russia represented approximately 1% of the company’s consolidated net sales. The company said it is “working to expedite its exit, while remaining committed to the safety and security of its employees in the country.” Owens Corning’s insulation subsidiary Paroc operates in Russia. The group also runs a composite materials plant at Gous in Russia.

Estonia: Insulation prices are reportedly 20% higher than prior to the Russian invasion of Ukraine due to increased production costs. Members of the Estonian Association of Construction Entrepreneurs (ACE) have threatenened to terminate all public sector construction contracts due to untenable costs. Other building materials have risen in cost to as much as double their pre-invasion price.

Russia: Denmark-based Rockwool has cancelled plans for a Euro200m expansion to its Vyborg stone wool insulation plant in Russia. In a statement, the company said that it would continue its operations in the country, while also respecting international sanctions. Rockwool employs 1200 people in Russia, 10% of its total employees.

In defending its decision to maintain ordinary operations, the producer said “For Rockwool, there is no contradiction in standing side by side with the Ukrainian people and at the same time standing side by side with our Russian colleagues.” It added that it has donated to the Danish Red Cross to support Ukrainian victims of the Russian invasion of Ukraine.

Ukraine: The Interagency Commission on Foreign Trade will introduce tariffs to all imports of flexible porous polyurethane foam. The duty on these goods will be 11.22% when the decision takes force, 10.66% after 12 months, and 10.13% after 24 months, according to Interfax. The latest tariffs follow imports on other building materials that are mainly targeted at Russia.

Ukraine: The interdepartmental commission on international trade has temporarily introduced special import duties on flexible porous slabs, blocks and sheets made of polyurethane foam classified for three years. The tariff follows an investigation started in July 2015, according to Interfax. The investigation concluded that an increase of polyurethane foam goods imported to the country at below local market prices took place in 2013 and 2014.

Ukraine: The European Bank for Reconstruction and Development (EBRD) is to invest in a Euro75m programme to boost energy efficiency by launching the Ukraine Residential Energy Efficiency Financing Facility (IQ energy). IQ energy will be implemented through partner-banks UkrSibbank, OTP Bank and OTP Bank. It will also be supported by an extensive energy efficiency awareness campaign.

Eligible borrowers under the programme will be able to receive loans for a wide range of energy efficiency measures. These may include: insulation of walls, roofs and ground floors; installation of modern energy-efficient windows, gas and biomass boilers; heat supply system upgrades; installation of solar thermal systems and many others.

IQ energy is supported by grant funding of up to Euro15m from the Eastern Europe Energy Efficiency and Environment Partnership (E5P), to which the European Union is the largest contributor. The funds will be used, depending on the type of investment, to reimburse up to 20% of loan amounts for individual borrowers and up to 35% of loan amounts for housing associations. IQ energy also benefits from technical assistance funding for programme implementation, provided by E5P and the Swedish International Development Cooperation Agency (Sida).

“Despite the substantial decrease in energy intensity over the last decade, the Ukrainian economy remains one of the least energy efficient among all the EBRD’s countries of operations and highly dependent on fuel imports. Being responsible for over 33% of Ukraine’s total energy consumption, the residential housing sector is the largest energy consumer in the country. In this respect, IQ energy will provide much-needed and timely funding but will also help change the energy consumption patterns of domestic households,” said Sevki Acuner, Director of EBRD Operations-Ukraine.

The EBRD is the largest international financial investor in Ukraine. As of mid-March 2016, the Bank had a total cumulative commitment of over Euro11bn through 363 projects in the country. The country holds one of the largest housing stocks in Europe with over 10 million buildings.

Hungary/Ukraine: Hungarian building materials manufacturer Masterplast has seen its earnings fall in 2014 after the worsening Ukraine crisis forced it to write off investment plans for a new expanded polystyrene (EPS) insulation plant in the country.

Masterplast has reported that its annual net income dropped by 38% year-on-year to Euro749,000 in 2014. Without the enforced Ukraine write-off, the company had expected its post-tax profit to reach Euro1.6m. Masterplast, which has a growing string of plants in eastern Europe, has reported that its 2014 revenue was flat at Euro81.6m, while its annual operating profit fell by 1% year-on-year to Euro2.7m.

Masterplast had planned to invest Euro1.4m to set up a new EPS insulation plant at Lviv in the far west of Ukraine, where it had bought and converted existing industrial premises. It expected to become Ukraine's third-largest player in the thermal insulation segment within three years. However, early in 2014 Masterplast suspended its national investment and project for the EPS and adhesives plant. With the situation deteriorating further since then, it has decided not to restart its expansion scheme until Ukraine's political and economic position has stabilised.