A Midland quarrying and building materials group has warned that soaring fuel and raw material costs could dig into its 2006 profits.
Ennstone said it was running out of scope for passing on the higher bills to its customers and that its low cost-producer status was at risk.
The Derbyshire-based company, which has been on the acquisition trail in a big way in recent years, yesterday reported a 103 per cent rise in pretax profits for last year.
Earnings rose to £13 million from £6.4 million in 2004, on revenues 43 per cent ahead at £159.8 million.
Turnover is expected to reach £200 million in the current year.
The total dividend for 2005 is raised by 7.3 per cent to 1.32p per share.
Executive chairman Vaughan McLeod said Ennstone had achieved "excellent" operating profits from its UK and US businesses.
But he went on to say: "Energy and raw material costs across the group, which increased significantly during 2005, will continue to rise in the current year.
"The group has been able to partially recover these costs through price increases, but maintaining our lowest cost base position may prove challenging."
In an interview with The Birmingham Post, Mr McLeod blamed the fact that companies are now struggling with soaring and volatile fuel prices on the lack of a policy to counter the rundown of North Sea supplies.
"We have basically run out of North Sea gas and oil and are now a significant importer, but we don't seem to have had a plan in place to handle that," he said.
Since the £50 million acquisition of rival group Johnston in 2004, Ennstone has clawed back £30 million in disposals.
It has recently bought surfacing contractors Smiths (Construction) £3.75 million cash and J & H Parry for £2.1 million as well as Bluestone Concrete for £1.76 million.
On the other side of the balance sheet, Ennstone is set to pocket £11 million from the sale of surplus land at a site at Telford for houses.
Rising costs notwithstanding, Mr McLeod was yesterday upbeat about the group's prospects.
"The business is in very good shape and we are confident of achieving strong progress over the next two years," he said. ..SUPL: