Profits at building materials giant CRH grew 25 per cent to €1.6 billion last year, the group said yesterday as chief executive Liam O'Mahony signalled that the group planned to hand back a greater share of its profits in dividend payments to shareholders from this year.

The board intends paying 52 cent a share, a 33 per cent increase on the 39 cent it paid last year. That is 4.8 times earnings. The group intends reducing this cover to 3.3 times earnings in 2008, meaning that it will pay out a higher proportion of its profits in the form of dividends to shareholders.

Finance director Myles Lee said CRH had decided it was "sensible to lower dividend cover and give a higher payout".

Mr O'Mahony explained that the group believed it would have enough cash resources to do this and continue to cover the cost of acquisitions and capital investment. He added that it believed it could sustain higher dividend payments in the future.

The company told shareholders yesterday to expect this to happen through 2007 and 2008, subject to no major changes in market conditions.

Revenue at CRH, Ireland's biggest listed company with operations in Europe and the US, grew 30 per cent to €18.74 billion in 2006 from €14.5 billion the previous year.

Operating profit increased 27 per cent to €1.77 billion from €1.4 billion in 2005. The growth came from both ongoing operations and acquisitions. Its operations generated cashflow of €700 million.

Profit before tax grew 25 per cent to €1.6 billion compared to €1.28 billion in 2005. Basic earnings per share (EPS) increased 20 per cent to 224.3 cent from 186.7 cent.

During the year, CRH spent €3.1 billion on acquisitions and investment in existing businesses. This included its record purchase of US asphalt business APAC for over €1 billion.

In 2006, CRH made its first foray into China with the purchase of interests in two cement producers in the north east of that country, Harbin Sanling and Yatai.

Late last year, the company announced that it was investing €200 million in its Platin cement works in Co Meath, a major employer in the region, and the supplier of two million tonnes of cement to the Irish market.

Mr O'Mahony predicted that the Irish market, which generates around 5 per cent of sales, would remain strong this year.