Mannok Publishes Performance Review and Business Outlook

Revenues up 16 per cent in 2021 but cost inflation impacts profitability
Publishes Sustainability Roadmap to achieve Net Zero
Targets +€200m green investment

12th May 2022: Mannok Holdings DAC [‘Mannok’], today publishes an overview of its 2021 operating performance for the 12 months ended 31 December 2021. It also publishes a sustainability roadmap – Mannok 2030 Vision – setting out a series of ambitious targets for the company with a commitment to reduce carbon emissions by 33 per cent by 2030 and achieve net zero by 2050.

This commitment will require a +€200m Green Investment that will transform Mannok’s production and distribution processes into one of the cleanest in its industry, an industry traditionally categorised as ‘hard to abate’ given its carbon emissions and energy use intensity.

With operations straddling north and south of the border, Mannok comprises two key divisions, Building Products and Packaging. Its key activities are the manufacture of cement, concrete, quarry and aggregate products, insulation materials, as well as the manufacturing of packaging products, mainly for the food industry, focussed on the Island of Ireland and GB markets.

Mannok 2030 Vision – setting out a series of ambitious targets for the company with a commitment to reduce carbon emissions by 33 per cent by 2030 and achieve net zero by 2050.

Performance and outlook overview:

Revenue: increased by 16 per cent from €233.2m to €269.9m reflecting good volume growth and customer demand.
EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation): at €25.8m (2020: €31.1m) was lower than the previous year as a result of substantial cost absorption by Mannok – mainly from mid-year. Key cost drivers included: energy prices (+66 per cent), carbon credits – increasing from almost €33 per tonne at the beginning of the year to over €80 at year end – and raw material costs for our PIR insulation business – as a result of a temporary global shortage of raw materials.
Outlook: Resilient demand, supported by stronger cost recovery and a levelling out of energy prices has driven stronger profitability post year end, following two challenging quarters.
€78.5m investment to date: a further €12.7m of investment in the period, brought total investment to €78.5m since the acquisition of the businesses in December 2014, with a further €8m of investment already in train for 2022.
+€200m Green Investment planned; advisers appointed to recommend optimum financing structure

+€200m Green Investment that will transform Mannok’s production and distribution processes into one of the cleanest in its industry…

Commenting, Liam McCaffrey, Chief Executive Officer said:

“Mannok has undergone a quiet but determined transformation over recent years, growing and sustaining employment, driving profitability and investing for the future. 2021 saw another strong performance despite unprecedented energy price hikes, a near tripling of the cost of carbon credits, as well as temporary global supply chain issues, most notably for our insulation business. Lean production and investment of over €78.5m over recent years have mitigated these short-term impacts and the outlook for 2022, based on trading to date and resilient demand, is positive.

“However, what these cost pressures in 2021 show is that decarbonising our operations is a commercial, as well as an environmental, imperative. I am pleased to say we have now developed ambitious plans to entirely decarbonise our fleet and to develop and utilise wind and solar energy as well as hydrogen and oxygen generation and deployment solutions, to power our manufacturing plants. This will result in circular, self-sustaining manufacturing sites that will transform the production of cement, and construction products in particular, and underpin shareholder value. Over the coming years we plan to invest over €200m in our local facilities, becoming a sector decarbonisation trailblazer in the process.”

Liam McCaffrey, Mannok CEO

Commenting, Chief Financial Officer, Dara O’Reilly said:

“Notwithstanding resilient demand, we saw substantial margin compression as a result of cost inflation in the latter half of 2021 following a series of energy price hikes. An assessment of these cost risk factors, coinciding with our long-term sustainability planning, has contributed to the development of a highly commercial sustainability investment plan. This plan has been developed in collaboration with a number of state agencies and third level institutions including Innovate UK, Enterprise Ireland. In addition the company is participant in Project Hylight which is headed by academics from NUIG and DCU.

“The Mannok Board has approved this strategy and advisers have been appointed to assess how best to finance this investment whilst also ensuring a capital structure that can accommodate changes to the group’s shareholder base over time. These plans represent a huge vote of confidence and a deepening commitment to the region and to local employment and prosects.”

Dara O’Reilly, Mannok CFO

Commenting, Mannok Operations Director, Kevin Lunney who oversees Mannok 2030 Vision said:

“The goals we have set are very ambitious, with a total of 36 detailed targets to achieve by 2030. Our plans will require significant innovation and technological development over the next number of years and will involve a very significant collaborative effort with all our people, our academic and business partners and the local community. We are confident that planned investment will make a significant contribution to the long-term sustainability of our sector and our region.”

Kevin Lunney, Mannok Operations Director

“…we have now developed ambitious plans to entirely decarbonise our fleet and to develop and utilise wind and solar energy as well as hydrogen and oxygen generation and deployment solutions, to power our manufacturing plants.”

“These plans represent a huge vote of confidence and a deepening commitment to the region and to local employment and prosects.”

Sustainability and Green Investment Overview:

Cement production processes are carbon intensive and categorised as “hard to abate” emissions. Mannok has undertaken a fundamental review of its operations that will result in the highest level of investment in the company’s history.
Its Green Investment plan commits to reduce carbon emissions by 33% by the end of the decade and to achieve net zero emissions by 2050.
The +€200m plan will commence with a €20m investment to facilitate the decarbonisation of the company’s fleet for completion by 2024 – producing green hydrogen to replace the majority of the 4 million litres of diesel fuel used annually. This phase will be followed by the development of a large wind farm and complementary solar farm, to provide renewable energy for its manufacturing facilities.
Alongside critical progress on climate change, planned investment will also enhance shareholder value and commercial sustainability and underpin Mannok’s commitment to the local community by doubling down on investment in the region.
Evercore Partners International LLP has been appointed to help evaluate the optimum financing solutions to drive this unprecedented level of investment. This process is likely to accommodate changes to Mannok’s shareholder base over time.
Alongside the business’s decarbonisation efforts, biodiversity and resource efficiency are identified as priorities for the company. In partnership with Ulster Wildlife, Mannok has already developed a comprehensive action plan for the almost 2,000 acres of biodiversity rich lands the company owns across the island of Ireland, which forms a significant part of the 2030 Vision. The plan will see an ambitious programme of restoration, protection and enhancement of these lands in the coming years, with plans to double the land carbon sequestration rate by the end of the decade.
Resource efficiency and circular economy targets include the elimination of waste, the establishment of water and energy conservation programmes, and the leveraging of lean principles to develop circular economy solutions.

Alongside the business’s decarbonisation efforts, biodiversity and resource efficiency are identified as priorities for the company.

In partnership with Ulster Wildlife, Mannok has already developed a comprehensive action plan for the almost 2,000 acres of biodiversity rich lands the company owns across the island of Ireland.

People and Community

Employment at Mannok, comprising over 800 staff, remained largely unchanged during the period which saw Mannok named as one of Ireland’s Best Managed Companies whilst its schools’ partnership, apprenticeship and graduate programmes, earned recognition in the Business in the Community Responsible Business Awards and the Irish News Workplace and Employment Awards.

As part of Mannok’s 2030 Vision, the company commits to:

Creating a diverse and inclusive workplace with professional development opportunities for every employee.
Doubling, to six, the number of schools’ partnerships it will support by 2025.
Supporting the development of a protected local historical site, Slieve Rushen House, which is located on Mannok land, to create a heritage and biodiversity centre for the benefit of the wider community.
Collaborating with suppliers and customers to decarbonise its supply chain, focusing on scope 3 emissions and responsible procurement, whilst ensuring full transparency on the carbon footprint of its products through voluntary disclosure.

Supporting the development of a protected local historical site, Slieve Rushen House, which is located on Mannok land, to create a heritage and biodiversity centre for the benefit of the wider community.