Revenue at Grafton rose by 6 per cent to €2.2 billion last year, and profit was driven by its UK merchanting business, but the Irish business showed some recovery in the second half, the company said this morning.

In a statement this morning, the company said underlying operating profit was 33 per cent higher compared to the same period a year earlier, with underlying pretax profit rising 41 per cent to €59.7 million.

All three divisions were profitable, Grafton said, with the manufacturing business showing some turnaround after restructuring.

The group said its Irish retail business showed some recovery in profit in the second half, and cost reductions had offset the effect of a decline in merchanting revenue here.

In the UK, it outperformed a generally weak market, and its operating profit margin increased to 4.85 per cent.

Chief executive Gavin Slark said the measures the company had put in place over the past two years had helped it to make "significant" progress, despite the challenging conditions.

"We remain cautious on the near term outlook due to the uncertainties in the economies and markets in which we operate," he said. "We expect to make further progress in the year ahead by focusing on a new phase of measures to improve profitability."