A buoyant British market and good weather have seen builders' merchant and DIY group Grafton record a strong start to 2007, shareholders heard yesterday.

Presenting a trading update at yesterday's annual general meeting (agm), executive chairman Michael Chadwick said the Irish DIY business was continuing to grow on the back of gains it made in the second half of 2006.

Mr Chadwick said "favourable weather and strong consumer spending" had added further momentum to the group which owns the Woodies and Atlantic Homecare DIY chains.

He said Grafton's Irish merchanting continued to grow solidly, suggesting that the downturn in new housebuilding was being offset by growth in the repair, maintenance and improvement (RMI) sector.

Grafton opened one new builders' merchants this year.

Mr Chadwick was particularly positive about Grafton's UK business where it focuses on the merchanting side of the business.

"Buoyant conditions in the RMI market were supported by a strong economy and healthy housing market," said Mr Chadwick.

Through a combination of acquisition and opening its own stores, Grafton has added nine new builders' merchants in Britain since the start of the year.

Last year the UK builders' supplies business was responsible for €1.7 billion of Grafton's total turnover of €2.9 billion.

"The first four months of 2007 have provided a good start to the year, and the group is positive about the overall prospects for its business as it moves into the seasonally stronger trading months ahead," said Mr Chadwick.

In a note to clients issued after the agm, Davy Stockbrokers said it believed the "recent de-rating of Grafton is overdone".

Davy analysts believe the agm statement is further proof that the group is capable of "dealing with lower new housing volumes in Ireland", and that the current share price "offers an attractive entry point".