Housing leads Tarmac to 48% rise in profits

to #393m last year. This upsurge flowed almost straight through to earnings per share, which were up 46% at 34.3p.

The market is worried about the possibility of a sharp slowdown later this year and into 1990, but the strong 1988 performance pulled the shares 14p higher at 305p, where they still sell

at under nine times earnings. They yield 4.4% on dividends of 10p, up

38% after a 7.5p final. The division which really stands out is housing, which more than

doubled its contribution to trading profits to #209m. Tarmac is the biggest UK housebuilder with 6% of the market and its completions were

8% up at 12,165, marking a further step towards Tarmac's goal of 15,000. Margins jumped from 18.5% to 26.6%. The current year will inevitably be much less buoyant, though Tarmac

straddles the country and so has some cushion against the marked downturn evident in the south-east of England. Aggregates demand is more even-keeled and this division produced over

50 million tonnes of materials, earning 19% more at #86.1. Tarmac says profit would have been #5m higher but for the Government's moratorium on

motorway maintenance contracts. The division is expanding capacity, with the Ravelrig quarry near Edinburgh starting operations in January and a major new granite quarry

due to open this summer. Capital investing is running at #50m a year. Building materials are also expanding, now running 10 brick and tile

factories, against seven. Profits rose 56% to #25.4m. Industrial

products, recently extended with the Ruberoid takeover, made 15% more at #19.1m. Construction turnover, including management contracting, is now nearly

up to #1000m and profits were 21% ahead at #23.3m. Tarmac is in the Channel Tunnel consortium and on a smaller scale the group is involved

in an urban regeneration scheme at Braehead. The group joined in the eighties' rush to invest in the US, but has not fared any better than others.

Profit from its operations there fell

11% to #41.6m, owing to the depressed Texas market and commissioning problems with a new cement mill. In December, Tarmac bought out the

minority interest in its main business and the outlook for 1989 is better. Overall, Tarmac has had a good start to the current year, according to

chairman Sir Eric Pountain. ''Order books, which are at record levels, and a strong economy give the basis for a powerful UK performance in materials and contracting

through 1989 and beyond,'' he says, though the housing outlook is more