and CHARLIE TAYLOR
Kingspan will halve executives' pay while cutting all other workers' wages by 40 per cent for two months to combat fallout from the Covid-19 crisis.
The news came as the Cavan-based insulation maker told shareholders it would withdraw its proposal to pay a 33.5 cent per share final dividend.
In a letter to staff, Gene Murtagh, Kingspan chief executive, said that from April 1st, executives would take a 50 per cent pay cut while all other staff must take a 40 per cent reduction “for the two full months of April and May”. The 50 per cent cut is thought to apply to the group’s top 10 managers.
Extreme measure
Mr Murtagh’s letter, seen by The Irish Times, acknowledged that this was an extreme measure but was critical to protecting as many jobs as possible.
He pointed out that coronavirus was severely disrupting demand and production in affected countries.
“The situation is highly volatile and unpredictable,” he said.
Mr Murtagh added that Kingspan must act immediately to secure all its workers’ long-term futures.
The group is also freezing all spending that is not critical to to the business.
Kingspan employs 14,500 people around the world making insulation boards, flooring and other building materials. The group has more than €1 billion in cash and undrawn, committed credit.
Sources say the pay cut and spending freeze are designed to position Kingspan to recover quickly once the coronavirus crisis has passed.
Kingspan has also scrapped its proposed final dividend for shareholders due to Covid-19.
The group said the global trading environment had “significantly changed due to the unprecedented challenges presented by the coronavirus”.
It said that in light of this it had decided to withdraw the proposal of a final dividend of 33.5c per share for its last financial year.
Had the payout proceeded it would have seen the company’s shareholder reward rising by 10.7 per cent on the 2018 dividend.
Kingspan said on Thursday it was in a “rapidly-changing environment” and would update shareholders on trading conditions at the end of April in advance of its planned annual general meeting.
Trading profit
The company, which announced a €750 million war chest to fund acquisitions earlier in the year, reported an 11.6 per cent rise in trading profit to a record €497.1 million in 2019.
It also said prior to the spread of Covid-19 to Europe that it intended to spend €150 million on expanding existing factories and building new ones at its operations around the world.
Shares in the company were trading down 3.5 per cent in Dublin.
