The company was optimistic about construction trends in the US and Europe, while analysts endorsed its view that it has successfully overcome challenging conditions over the past six months.

A significant increase in CRH's acquisitions spending in that time appears to have underpinned market confidence that CRH is strongly positioned in both markets.

Rising energy costs were the main reason given for the drop in pre-tax profit growth over the last six months. The company felt the pinch particularly hard in the US, but CRH chief executive Liam O'Mahony said its American operations had coped well with the higher costs. Price increases at its materials and distribution divisions, and a group-wide efficiency drive had helped reduce the impact of higher oil and gas prices during the second half, he said.

CRH expects 2005 pre-tax profit to top out at 1.26bn, with second half profit ahead 90m or 11.5% on the 785m achieved in 2004. That compares with first-half profit growth of 19.8%.

The company remains confident in the business climate in both the US and Europe, however. CRH executives expect the recently-passed US highways bill to underpin federal spending in the medium term and have seen a pickup in both residential and industrial construction activity in several larger markets.

CRH is also poised to benefit from repair work continuing across several southern US states in the aftermath of Hurricane Katrina, which hit New Orleans in late August.

Goodbody's Robert Eason indicated that CRH's optimism is well-founded. Growth in US construction spending was ahead 9% in the year to November 2005, he said, and the momentum appears to be continuing, thanks to spending on road building and commercial construction.

In Europe, CRH pointed to improving conditions in several markets. In Poland, Finland and the Baltic states the company reported stronger demand in the second half of 2005 at its materials division.

The out-turn for European distribution was flat on 2004, but CRH flagged a pick-up in the Dutch economy as a promising sign for the division, which has been held back by poor consumer confidence and sluggish growth in spending on DIY, repairs and maintenance in the Benelux region.

Merrion analyst John Mattimoe noted that the CRH management team was unusually upbeat in both the trading statement and a conference call that followed.

"Missing was the usual liberal use of caveats relating to the outlook, " he said. "The outlook commentary was unambiguously upbeat.

"Price recovery has been successful to date and remains a priority; the outlook for the business is 'on the whole positive', with signs of a pick-up in the Dutch economy, benefits from the new federal US highway bill, and the incremental impact of second half acquisition activity, " he said.

CRH spent a company record 1.2bn on acquisitions in the second half of 2005, against just 198m in the preceding six months. That included a 334m outlay on three building materials companies in the US and last month's 300m purchase of a minority stake in Spanish cement maker Uniland.

The latter deal gives CRH access to both South America and North Africa. Liam O'Mahony said CRH would look to increase its 26% stake "if the opportunity arises".

A scarcity of deals in the first half of last year had given rise to some concern among investors that opportunities had dried up, according to NCB's John Sheehan, so the final tally of 2005 deals contained in the trading statement will have been welcome.

"Given the timing of the greater part of this acquisition spend, we expect it to be a material contributor to 2006, " Sheehan said.

That confidence appears to be widespread. CRH shares climbed 2.5% to 25.50 after the trading statement. The share price advanced by 26% last year, but several analysts believe they still offer good value at current prices.

Davy's Joe Burnell has increased his 12-month price target from 28 to 29 on the back of the trading statement.

Merrion's Mattimoe, who also rates the shares a 'buy', feels the re-rating that has been underway after the increase in acquisition spending will continue. At a price/earnings ratio of 12 times 2006 forecast earnings, CRH is still an attractive proposition, he said.

"We believe there is scope for further re-rating given the re-acceleration in development spending and the solid trading outlook. A re-rating to 13 times forward earnings over the year is a realistic target, " he said.

That would imply shareholder returns of around 20% in the coming year.