Roofing group SIG is confident of a sharp increase in insulation sales as the UK drives forward energy efficiency programmes.

The group expects to report a 28% rise in pre-tax profit to £139 million for 2007. This is on revenue of £2.4 billion.

It is investing to increase capacity in the UK to meet the expected demand driven by a new scheme for upgrading insulation in existing homes, which begins in April 2008 and runs for three years.

The company said good levels of growth have been achieved in insulation, roofing, commercial interiors and specialist construction products in the UK and Ireland where total sales have increased by around 21%.

Total sales in mainland Europe increased by some 53%, with like-for-like growth of around 13% in sterling terms.

The solid trading update pushed its share price up nearly 7% to 751.5p. This marks the end of a share slump where its stock price fell 50% in the second half of 2007.

The firm said 'significant' expansion opportunities are being pursued.

Chief executive David Williams will take early retirement on 30 June, to be replaced by Chris Davies who is currently managing director of SIG's European operations.