Kingspan has signalled strong growth for last year and a healthy start to trading in 2006.

In a pre-close update issued yesterday, the building materials group said both operating profit and earnings growth for 2005 would be "significantly ahead of [ the] prior year and in line with current market expectations".

This implies a jump of nearly 40 per cent in earnings for last year, although analysts are forecasting slower growth in 2006.

Davy suggests this year will be "something of a lull" for Kingspan, as the firm awaits the full implementation of beneficial new UK building regulations in the second half.

Kingspan said the "strong revenue growth" it had recorded in the first half of 2005 had continued into the second part of the year. The firm reported satisfactory volume growth and stable operating margins.

"The present activity pipeline points to a positive start to 2006," the company said.

It pointed to a good performance in the Republic, steady trading in the US and a significant improvement in central and eastern Europe.

Weaker construction and slower economic growth in the UK should not have a significant impact this year, Kingspan said.

The firm said its net debt for the end of 2005 was forecast to be €180 million, after €45 million in capital expenditure and an acquisition spend of €140 million.

Kingspan made five acquisitions over the year, including the purchase of Century Homes in March for up to €98 million.

More recently, it entered into a joint venture with UK and Belgian company Recticel whereby both firms will combine their industrial insulation manufacturing businesses.

Shares in Kingspan lost some ground yesterday, having strengthened significantly in previous days.

Some commentators had expected the company to use the trading update to raise its guidance for 2006 and were disappointed when this did not happen. Shares fell by 24 cent to €10.91. NCB has a price target on the stock of €11.70.