Kingspan has reported better-than-expected first-half results, delivering a 33 per cent increase in pre-tax profit to €37.5 million.

The Cavan-based building materials company said it enjoyed healthy growth in all of its geographic markets and across its full product range, with the exception of access flooring in Europe, and remained confident about the outlook for the full year.

"Even though the group is operating in an environment where there is upward pressure on raw material prices, markets are reasonably buoyant and with the current momentum the group expects to see a satisfactory outcome for the year as a whole," Kingspan said yesterday.

Kingspan has been affected by higher prices for steel and chemicals but said it has been able to pass the increases on to its customers.

Shares in the company rose by 30 cents, or nearly 6 per cent, to €5.45 as analysts set about upgrading their forecasts.

"The results confirm that Kingspan is on track for its first year of double-digit earnings growth since the group acquired Tate," Davy analyst Mr Florence O'Donoghue said.

The company announced an interim dividend of 3.4 cents per share, an increase of 31 per cent.

The dividend is covered 5.9 times but Kingspan intends to steadily reduce its dividend cover to 4.7 times by year-end with the aim of bringing it down to four times eventually.

Turnover in the first half rose by 16 per cent to €439.4 million. A breakdown of the company's businesses showed that the insulated panels division saw sales rise by 23 per cent to €164.8 million, helped by additional capacity in the UK and Ireland.

Kingspan is also investing €12 million in the construction of a new facility in Hungary, which should be up and running in the spring of 2005, serving the Hungarian and Romanian markets.

Kingspan's raised access flooring business in the US was profitable in the first half as it posted a 36 per cent rise in sales. But the European performance was disappointing as sales fell by nearly 27 per cent.

However, Kingspan said the European market was showing some signs of stabilisation, particularly in Ireland and Britain, where two manufacturers exited the industry.

Capital investment in the period came to €28.4 million and was mostly related to the creation of additional manufacturing capacity.

For the full year, capital investment is expected to be around €60 million, a level chairman Mr Eugene Murtagh expects will be maintained for the next two to three years.

Net debt at the end of June was €116 million, below analysts expectations and down from €120.8 million at the end of 2003.

In relation to corporate governance, Kingspan said it planned to appoint two new non-executive directors in the near future, one to replace former Aer Lingus chairman Mr Tom Mulcahy who resigned from the board earlier this year.

Mr Murtagh also repeated he would address the splitting of the roles of chairman and chief executive, both of which he holds at present, before year-end.