Building materials and insulation specialist Kingspan expects profits to grow by close to €40 million this year.

The group also intends to spend a total of €200 million this year and in 2008 on building and upgrading plants in the UK and Europe.

In a statement issued at its annual general meeting (agm) yesterday, Kingspan chairman Eugene Murtagh said its businesses in the UK, Europe and the US were performing strongly.

"Order levels in the first four months of the year have been strong, and the board anticipates that the current momentum of the businesses will continue in the immediate term," he said.

"In the absence of any unforeseen circumstances, the group is confident, given the strong performance in the first four months of the current year, that operating profits for the year as a whole should grow in the region of 20 per cent over the figure of €194 million in 2006."

His statement indicated that the Irish housing market has slowed since last year, but that this was expected. However, demand for the group's products is growing in Ireland, as office and commercial building continues to increase.

Speaking after the meeting, chief executive Gene Murtagh said this area of business was "very strong and has more than compensated for the lull in the housing market".

He said affordability had become an issue for housebuyers. "Inevitably, prices are going to have to moderate," he predicted.

Kingspan's main focus is insulation and related products designed to cut energy use in buildings. About 80 per cent of its business is outside Ireland.

The company is planning to spend €100 million this year and a similar amount next year on increasing its manufacturing capacity in eastern Europe, where it has been growing its presence in recent years, and in the UK and the US.

Gene Murtagh said yesterday that it would be "comfortable" with spending between €500 million and €600 million on buying rivals.

"We are always looking, but we have nothing imminent," he said. He stressed that the group would only buy businesses it believed were suitable.

"They have to be the right acquisitions, so you could have a situation where we do nothing for a while and then several could come along one after the other," he said.

He added that the recent craze for private equity buyouts had driven up prices, and said Kingspan had to adjust its expectations to match this change in the market.

He also said that the company had put most of its efforts into growing its businesses organically.