Buildings materials group CRH is forecasting that its full-year profits for 2004 will rise to more than €1 billion for the first time.

However, it cautioned that this year economic uncertainty combined with the impact of the weak dollar and high energy and raw materials prices would influence its performance.

The statement, issued to the stock exchange yesterday, was broadly in line with market expectations although there were concerns about the trading outlook. CRH shares traded lower in Dublin, closing at €19.60, down 50 cents or 2.5 per cent following the statement. CRH will announce full-year figures on March 1st.

The group, which generates about 50 per cent of its profits in the US, also has operations in Ireland, Britain and continental Europe. Yesterday, it said those markets had shown improved activity levels through the second half of 2004 but that its results were affected by higher world energy prices and rising input costs and by the weakening of the dollar. Profits for that period are expected to increase by around 5 per cent compared to €703 million recorded in the same period last year.

The weak dollar combined with the exchange rates applying to earnings in other currencies cost the group €40 million, equivalent to 5 per cent of 2003 profits, it said.

In Ireland, CRH benefited from strong growth in residential construction with an estimated record 77,000 house completions, up from 68,800 in 2003. Demand from the infrastructure sector was also strong but eased towards the end of the year as some major projects were completed ahead of schedule. The group said that earnings would be flat overall as product prices had failed to compensate for cost increases and margins had declined.

In Britain and Northern Ireland, volumes at its Ibstock subsidiary were down, although price improvements were achieved. Profitability improved and was helped by a modest strengthening of sterling.

The group said its mainland European materials businesses had a satisfactory 2004 on the back of improved economic conditions. Over the full year, this division will show a strong advance on 2003 levels helped by the benefits of acquisitions and organic improvements, according to the statement.

Its product and distribution subsidiaries' markets in this region remained subdued last year but were helped by a significant improvement in sales and operating profits from recent acquisitions, in particular Cementbouw.

In the US, profits at its materials unit were maintained at 2003 levels but the weak dollar will result in a €26 million reduction in its contribution, when converted into euro.

Another €23 million was shaved of its US products and distribution business as a result of currency conversion, but it anticipated a good increase in its operating profits.

Commenting on the outlook for the group, CRH chief executive Mr Liam O'Mahony said the recovery of higher input costs through price improvements and efficiency measures will remain a priority for the year ahead.