Qualceram Shires has reported a 60 per cent rise in pretax profits for last year but said it is engaged in a root-and-branch cost review of its business, aimed at maintaining its competitiveness.

The review, which is expected to be completed within a month, is likely to give rise to a "significant" one-off restructuring cost in 2005, the company said.

While Qualceram enjoyed a strong first half, a weakening housing market in Britain and rising energy and utility costs took their toll on the company in the second half of 2004 and remain issues for the future.

The group is also facing stiff price competition from Asia and consolidation in the builders merchanting sector to which it sells.

Chief executive John O'Loughlin said the group expected to be in a position to announce the outcome of the review, looking at areas such as the supply chain and outsourcing options, by the end of April.

"Everything is on the table at this point in time," he said.

While profits rose by 60 per cent to €5.7 million last year, they included the profit on the sale of the group's property in Hanley for which Qualceram received net proceeds of €4 million.

This was used to pay down debt, prompting a fall in gearing to 45 per cent from 67 per cent a year earlier.

Qualceram said it would pay a final dividend of 3.75 cent per share, resulting in a full-year dividend of 5.75 cent, up 9.5 per cent on the previous year.

Turnover rose by 3.6 per cent to €98.2 million, with the British market accounting for 52 per cent of sales at €51.2 million.

Irish sales came to €41.6 million, or 44 per cent of the total, with export sales representing the balance.

"Demand for the group's products in Ireland is stable and the UK market continues to be challenging and will be the primary focus for management action in 2005," Qualceram said.

Shares in the group were unchanged yesterday at €1.30.