Builders merchant and DIY group Grafton posted a 2 per cent rise in first-half revenue as key building supplies and home improvement markets in Ireland and Britain struggled to recover in the face of weak consumer sentiment.

Group turnover rose to €997 million in the first half of the year, compared with €979 million a year earlier. More favourable weather conditions benefitted the company during the six month period, but the rate of growth slowed in the second quarter.

In the UK, where Grafton made more than two thirds of its revnue last year, average daily like-for-like sterling turnover rose by about 4.7 per cent.

However, declining incomes and falling employment in the Irish market gave rise to "challenging trading conditions" as spending on home improvements and DIY declined, and turnover fell by around 6 per cent.

"The trading environment in the group's key markets is proving slow to recover to more normal conditions in light of the continuation of weak mortgage lending and low levels of consumer confidence," Grafton said.

"However, the group continues to significantly improve its trading performance from the historically low levels of the recession."

Additional reporting: Reuters