CRH expects to deliver an increase in first-half pretax profits in the "high teens" when it reports at the end of August as a strong performance from its US business helps offset a more lacklustre showing in Europe.

In a trading update released yesterday, the building materials group said it also expected to make further progress in the more important second half of the year despite the recent sharp rise in the price of crude oil.

CRH generates around 70 per cent of its operating profit in the second half.

According to CRH, it has enjoyed a good start to 2005.

Its US operations, which performed strongly in the first four months, continued to deliver through May and June, partly offsetting the effects of severe March weather in northern Europe, it said.

"Although our European operations have benefited from a return to normal seasonal weather patterns, the overall trading environment for these businesses remains subdued," the company said.

Shares in CRH closed 51 cent, or 2.3 per cent lower, at €21.68 last night as dealers reported some disappointment with the low level of first-half acquisition spending and amid some profit-taking.

However, analysts set about upgrading their forecasts for the company.

Davy, which acts as broker to CRH, believes the company can deliver an increase of more than 17 per cent in full-year pretax profits to €375 million from last year's €319 million.

Davy has also lifted its full-year earnings per share forecast on the company from 175 cent to 178 cent, a 10 per cent increase on last year.

Meanwhile, NCB is pencilling in earnings per share of 177.4 cent for this year, an increase of nearly 9 per cent, followed by 194.6 cent next year or growth of close to 10 per cent.

A breakdown of first-half trading by the company showed that the European materials division is expected to show an improvement in operating profits on 2004 as the impact of last year's acquisition of a 49 per cent stake in Portuguese cement producer Secil kicks in.

In contrast, operating profits in the group's European products division is expected to be lower than in the first half of 2004 as tough trading conditions continue in its insulation business and as the major European economies remain "generally subdued", CRH said.

However, first-half operating profits in the European distribution business are expected to be similar to 2004.

But the US should be the real driver of the first-half figures, which are due for release on August 30th.

Higher volumes and prices mean the materials division should show a substantial improvement on the first half of 2004, CRH said.

The products business is also expected to advance strongly as is the distribution business which benefited from a buoyant market in Florida due to the extensive maintenance and repair work needed there following the hurricanes that swept across the state in August and September last year.