Pre-tax profits at building materials group Kingspan grew by 3 per cent last year, despite taking a €2.2 million currency translation hit which stemmed from the strength of the euro against sterling and other currencies.

The group yesterday reported that turnover was up 6 per cent to €784 million in 2003 from €739.6 million the previous year. Operating profit before goodwill amortisation slipped 3 per cent to €79.4 million from €82 million.

The group blamed the euro's pick up against sterling and other currencies for this fall, saying that it wiped €4.9 million off the reported figure.

It also said that it cut its turnover figure by €60.5 million. Almost €500 million of its turnover is generated in Northern Ireland and Britain.

Pre-tax profits also suffered, with the currency difference wiping €2.2 million off earnings to leave them at €65.4 million. However, this was still 3 per cent ahead of 2002, when pre-tax profits were €63.7 million.

A €4.2 million fall in interest charges to €6.8 million in 2003 from €11 million the previous year helped maintain pre-tax profit growth. This was due to the fact that Kingspan carried a lower level of debt during 2003 than in 2002.

It had net debts of €117.3 million at the beginning of 2003, compared with €170 million a year earlier.

Funding the payment of a special dividend of €19.8 million during the year increased net debt levels slightly to €120.8 million.

Kingspan's board is proposing to pay a final dividend of 4.6 cent a share, a 21 per cent increase on 2002. This will result in a full-year dividend of 7.2 cent a share, up 22 per cent on last year. Basic earnings per share (EPS) were 31.2 cent, a 3 per cent increase on last year's EPS of 30.2 cent.

In a statement, Mr Eugene Murtagh, chairman of the Dublin and London-listed company, described the company's 2003 performance as satisfactory, with strong turnover and pre-tax profit growth.

"This was achieved in a year when substantial parts of the construction markets in which we operate showed little or no growth," he said.

The group said it would continue to invest in production capacity to meet anticipated growth in its main products - insulation, flooring, environmental containers and factory-produced solutions to structures normally built by the construction industry's traditional "wet trades".

It also said it would continue to cut operating costs at all plants.

Merrion Capital analyst Mr John Mattimoe said the stockbroker would continue to recommend the company as a strong buy, on the basis that it would experience a "meaningful return to growth" this year. He said it had the potential to deliver average EPS growth of 20 per cent over the next three years.

Kingspan's shares closed at €4.28 last night, a 1.28 per cent fall on their opening price of €4.35.