Central bankers from the group of 10 (G10) leading industrial nations meeting in Basle recently were optimistic regarding the prospects for the global economy.

According to the top bankers, the world economy is strong and risks that it could be derailed are fading. Jean-Claude Trichet, ECB president and spokesperson for the G10 central bankers, was upbeat in his comments to the media and Asian central bankers also echoed the positive sentiment.

Bank of Japan governor, Toshihiko Fukui, said his country's economy was improving moderately, despite the continued risk of deflation. China, now the world's sixth-largest economy, expects its economy to grow in the 7-8 per cent range this year.

This positive official view of economic prospects should come as music to the ears of equity investors. However, economic growth is only positive for share prices if it enables companies to grow their profits and if it doesn't trigger inflationary pressures.

Such pressures are quiescent throughout the world and the consensus view is now that dollar and euro short-term interest rates will remain at or close to current levels for the remainder of the year.

Regarding company profits, we are well into the reporting season and in general companies are performing well, although rapid profit growth is hard to find.

Three recent reports from Irish companies - Kerry Group, IAWS, and Kingspan Group - provide interesting insights at the micro level. The largest of these is Kerry, with a 2.7 billion market capitalisation, and it revealed 2003 results that were in line with expectations.

Earnings and dividends per share rose by 10 per cent despite the negative impact on profits due to the weak dollar exchange rate. Like-for-like sales growth was 4.6 per cent but profit margins improved thus enabling the group to achieve its double-digit percentage rise in profits. Sales grew steadily across all of the group's markets in Europe, Asia and the US.

Kingspan reported pre-goodwill earnings per share (EPS) of 36 cents for 2003; that was just 1 per cent ahead of the prior year. This static performance was partly due to continued weakness in some of Kingspan's market segments.

Raised access flooring was particularly weak in both the US and UK. However, other products such as insulation panels were strong, with sales up 22 per cent mainly due to market share gains.

In fact, currency effects were the main reason for the lack of growth in overall profits in 2003. Excluding the negative impact of the weak dollar, results showed sales growth of 14 per cent and 3 per cent higher operating profits.

Another company to report during the week was IAWS, which pleased the market with a 26 per cent rise in interim pre-tax profits, which were much better than market expectations.

IAWS reported strong results across its various geographical regions. The Irish and UK convenience food business (Cuisine de France, Delice and Pierres) recorded strong sales growth of 13 per cent. In America the company has a number of joint ventures and they all performed well despite the currency impact.

At current share prices, these three companies continue to offer good investment value, particularly if Irish and global economic conditions remain good over the next few years.

The profits of these Irish companies will be influenced by any further change in the euro/dollar exchange rate and further dollar weakness would have a negative impact on reported profits.

Nonetheless, the underlying businesses seem set for sustained growth and in this context the valuation of these companies as measured by their price-earnings ratios (PERs) looks attractive.

IAWS has the highest PER of 15.7, but it has been growing rapidly in recent years and has successfully switched its focus into higher-margin consumer foods.

Kingspan has the lowest PER of 10.6, reflecting the highly cyclical nature of its business. Finally, Kerry's PER lies between these two at 12.2 and does not look like a high valuation for a company that has so consistently produced double-digit earnings growth.

Overall, these three companies represent a microcosm of European equity market themes and trends. Underlying profit growth is good, albeit offset materially by the impact of the strength of the euro.

However, valuations are inexpensive and therefore profit growth should gradually feed through into higher share prices.