Analysts with Irish stockbroking firms have slashed their 2002 earnings forecasts for the building materials group Kingspan following the profits warning last Friday and now believe that the Tate subsidiary in the United States - bought for €140 million (£110 million) a year ago - will run up heavy losses.

That profits warning was preceded by heavy trading in Kingspan shares and this trading is now understood to be under investigation by the Irish Stock Exchange. Before that spate of selling, Kingspan shares had been trading at €3.30, but since then the shares have fallen heavily and yesterday closed at €2.64.

In a research note yesterday, ABN Amro analyst Mr Pat O'Sullivan Greene estimated that the loss of some major contracts would mean that instead of an operating profit of €8 million in the current year, Tate instead would have an operating loss of €5 million.

"Turnover will decline to well under $100 million [€114 million] for 2002 (against guidance at the time of the acquisition of $200 million plus!)", said the ABN Amro analyst, adding that Kingspan was "a potential acquisition target at current levels and given the recent performance of managerment". Any bid for Kingspan, however, would need the support of chief executive Mr Gene Murtagh who owns almost 24 per cent.

In another note, Davy analyst Mr Florence O'Donoghue cut his 2002 earnings forecasts for Kingspan by 16 per cent to 33.7 cents per share. He forecasts sales in 2002 for Tate of just €50 million and an operating loss of €7 million, down from the previous forecasts of €100 million sales and €8 million operating profits.

"This is a huge blow for Tate which has suffered significantly from the downturn in the US economy. This is the third time we have reduced our forecasts for Tate since Kingspan acquired it, and its failure to meet expectations remains a huge disappointment," said Mr O'Donoghue.