Shares in Grafton Group rose by 4.2 per cent to €9.90 in Dublin yesterday after the company published a strong set of interim results four weeks ahead of schedule.

In the six months to the end of June, Grafton said its total revenues rose by 13 per cent year on year to €1.6 billion.

Its operating profit was up by 16 per cent to €124.4 million while its pretax profit, excluding property disposals, increased by €106.4 million.

Grafton's decision to publish its results ahead of the original September 11th schedule was aimed at assuaging concerns about the impact of a decline in house building in Ireland on its merchanting business here.

This has played a large part in the 21 per cent decline of the company's share price this year.

The move also took Grafton out of its "closed" period and gives it the "flexibility to make market purchases of Grafton units".

Executive chairman Michael Chadwick refused to comment on the extent of any share buyback programme.

New housing in Ireland accounts for 12.5 per cent of Grafton's turnover. It said it expected this segment of the business "to continue to decline over the remainder of the year".

"Trading in July has been satisfactory, with continued growth in sales and profit, albeit at a lower rate than in the first half," the company added.

Grafton's UK arm increased its revenues by 17 per cent to €979.4 million while the Irish division achieved a more modest 6 per cent growth to €628.8 million.

"We're very pleased with the UK results but we may have lost a little market share [ to rival Travis Perkins]," Mr Chadwick said.

He said the UK business benefited from good underlying demand in the residential repair, maintenance and improvement market, which represents 80 per cent of its business in Britain.

Sales at its builders merchanting business here rose by 4 per cent to €424.2 million, while its Irish retailing arm, comprising Woodies DIY, Atlantic Homecare and In-House at the Panelling Centre, increased revenues by 14.4 per cent to €168.2 million.

Grafton spent €73.4 million on acquisitions and development projects in the first six months, compared with €65.4 million in the same period of 2006.

Six businesses were acquired in the first half of the year, and Mr Chadwick said further acquisitions are likely this year.

He said Grafton was unlikely to sell any more property in the near term. The company has identified sites at the Naas Road in Dublin, Bishopstown in Cork and near the Millennium Dome in London for sale.

"We're still working on them but the market seems to have slowed somewhat," he said.

Goodbody Stockbrokers maintained its buy on the stock, with a one-year price target of €12.

"Short term investors seem to have general concerns about it so its shares might tread water for a while," said Goodbody analyst Robert Eason.