Grafton Group plc, the builders' merchants and DIY Group, has announced its final results for the year ended 31 December 2007.

The results show good growth in sales, profits and earnings per share for 2007.

Irish turnover increased by 2% to €1.23 billion but operating profit was down 5% to €123.7 million, while sales were marginally higher at €819.2 million.

The Irish merchanting division developed rapidly having almost tripled its turnover over the past three years.

The group said 2007 "was a satisfactory year for the business despite a small decline in profits from the record levels achieved in 2006".

According to the group "the Irish manufacturing business delivered a resilient performance in the first half but second half trading conditions became more challenging and volumes declined in line with the slowdown in new house building activity".

In 2008, the group expects the Irish housing market will continue to adjust to a more sustainable supply and pricing environment in response to more moderate demand.

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A group spokesperson said: "Underlying demand for housing is however expected to remain strong due to favourable demographics and growth in employment and incomes.

"Affordability has been improving due to lower house prices and rising incomes and the current interest rate tightening cycle appears to have come to an end. The strength of demand for rented accommodation has pushed up rents and this should begin to translate into an improvement in housing starts."

The Irish business outperformed in a market that was influenced by a significant decline in activity in the new housing market during the year which was partially offset by continued growth in the repair, maintenance and improvement and DIY markets.

In the UK, the improvement in market conditions experienced in the second half of 2006 continued throughout the year.

UK profits were at record levels due to good growth in the established business and contributions from acquisitions. The business experienced good like for like sales growth and this was reflected in an increased operating margin in the overall business.

Michael Chadwick, the company's Chairman said: “In another record year, the ongoing development of our businesses in the UK and Ireland has proved its worth.

"We will continue to pursue the consistent growth orientated strategy that has been successful for the past two decades.

"While maintaining a focus on closer integration, scale related benefits, lower cost base and product sourcing gains, Grafton will also take advantage of acquisition and development opportunities that continue to be available and that represent value and are a good strategic fit," he said.

(VB)