Building materials group CRH says it expects pre-tax profits for 2006 to rise by 23% on 2005 to just under €1.3 billion, boosted by significant contributions from companies it has bought over the past 18 months.
In a trading statement, CRH also said it had spent €1.3 billion on acquisitions in the second half of 2006, bringing the total for the full year to a record €2.1 billion.
The company said the profit increase came against a backdrop of higher costs and falling US house building. It said trading in its European businesses gathered momentum in the second half, while US operations continued to perform well despite the decline in the US housing market.
CRH said a continuing strong residential market continued to boost activity in Ireland, while the National Development Plan is still bringing good roads and infrastructure activity.
On 2007, the company said the outlook for Europe remains positive, while its broad spread of US businesses would help it cope with a drop in new house building. It pointed out that new US housing accounts for only 10% of its total turnover.
Meanwhile, a breakdown of its second half acquisitions showed a number of developments in Ireland. CRH acquired Lurgan-based Salmor in July. The company makes accessories for cable and water supply infrastructure.
CRH and Cola Teoranta have formed a 50-50 joint venture to acquire bitumen storage terminals in Dublin and Belfast ports. CRH has also bought Dublin-based metal and plastic accessories distributor Construction Accessories Ltd.
Davy Stockbrokers, which is CRH's broker, said the company's full-year profit before tax for 2006 is likely to reach almost €1580m, 23% ahead of 2005, which implies growth of 18% in the second half.
Davy said strong recovery in Europe, good infrastructure and non-residential markets in the US, were the main drivers.
The stockbroker firm said Poland and Holland appear to be among the best-performing markets in Europe, with Holland accounting for around 12% of CRH profits.
Davy recently upgraded its price target on the company to €35.00, 13% above current levels.
It said that the outlook for 2007 looks positive with organic growth expected in both the US and Europe.
Shares in CRH were down 55 cent at €31 in Dublin this afternoon.
