Bathroom suites manufacturer Qualceram Shires posted pre-tax profits of €3.9 million last year compared to a loss of €5.1 million in 2005.

However, the results for 2005 included more than €6 million in exceptional items as part of the company's restructuring. The outsourcing arrangements introduced in 2005 contributed to the group's recovery last year, it said.

Operating profit, before exceptional items, rose to €4.1 million.

Group turnover rose by 6.4 per cent to €102 million despite what the company termed "competitive" market conditions in Ireland and Britain, and the rise in energy costs in the second half of the year.

It said these pressures were being addressed by developing its outsourcing arrangements, focusing on its supply chain and improving the quality of its service delivery.

In Ireland, turnover grew by 5.7 per cent to €45 million last year on the back of strong economic growth and the record level of new house completions.

While new house starts this year are expected to decline, Qualceram said it still expects its Irish operations to benefit from SSIA spending on home improvements.

Sales in Britain grew by 5.8 per cent to €50.3 million against what the company described as a background of strong competition, a quiet new house build market and a decline in the repair and maintenance market.

"2006 was a year of enhanced performance by Qualceram Shires, with a marked improvement in profitability and turnover in both our key markets," said Qualceram chief executive John O'Loughlin.

"This satisfactory performance, achieved in challenging and competitive market conditions, is a result of management's focus on the group's strategic business model which also positions the group on a solid platform for the current fiscal year."

Qualceram also said that it intends to sell its Arklow site and to relocate to an alternative site in the locality.

Last September it reached an agreement with the board of Arklow harbour commissioners to buy the freehold interest in part of its facility at South Quay in the town.

Pending the outcome of the sale of its existing site and relocation, which the company said would involve substantial costs, it said it would preserve cash reserves and pay no dividend.