Analysts reacted positively yesterday to results from construction group McInerney where pre-tax profits rose 14 per cent for 2002, the firm's seventh consecutive year of profit growth.

The firm's broker Davy said the stock was undervalued while Goodbody also gave it a "buy" rating. Strong demand for new houses in Ireland and continued expansion into the UK market were the main drivers behind McInerney's strong performance.

The group's rental/timeshare operation in Spain also made a solid contribution.

On Thursday, the firm reported a pre-tax profit of €20.62 million for the year to the end of December, up from €18.14 million in 2001.

Overall, turnover increased to €258.1 million from €185.2 million, while profits after tax increased by 18 per cent, to €16.4 million. Basic earnings per share increased by 15 per cent to 50.32 cent, slightly higher than Davy's final forecast of 50 cent.

The positive results mean shareholders can expect to receive a dividend of 6.25 cent per share. This is part of the group's policy of increasing the proportion of earnings distributed to shareholders.

Housebuilding in Ireland was the group's most successful activity, generating profits of €18.6 million before tax. Houses completed last year numbered 1,011, up from 808 in 2001. Of these, 879 were in private housing, reflecting the group's strategy of focusing on first-time buyers. Less successful, however, was contract business, which reported a loss of €747,000 for the year in the face of falling margins in that sector.

Despite a recent survey by Permanent TSB and the ESRI, which showed a 0.2 per cent drop in new house prices in January, managing director, Mr Barry O'Connor, is confident that demand will remain strong in 2003 and expects that the company will build a similar number of new houses this year.