New housing construction projects for the first three months of the year were up 15 per cent on the figure for the same period last year, the managing director of Grafton Group, Mr Norman Kilroy, said yesterday.

The level of start-ups "suggests that there is a good market out there for some months ahead", he said, speaking after the annual general meeting of the building materials group in Dublin. The start-up figure for the first three months of 1999 was itself 8 per cent up on the 1998 figure. The group's sales were growing ahead of the market.

Continued strong growth in the Republic's economy could be expected if the required labour force growth occurred. The British economy is showing steady growth, especially in the repair, maintenance and improvement areas which were the group's main sectors, said the executive chairman, Mr Michael Chadwick.

Mr Chadwick said the sterling/ euro exchange rate was positive for the group as sterling profits were converted into higher euro profits. He said the stock market had not yet looked at this positive aspect of the euro's low exchange rate for companies with profits coming from outside the euro zone.

The group has been shifting its purchasing of products from the UK to countries in the euro zone. On acquisitions, Mr Chadwick said five UK acquisitions had been made already this year and at least one more was likely before June.

Growth in the Republic is more organic. The Woodies network continues to expand. A new branch will be opened in Athlone, Co Westmeath in June and other locations are being examined. Mr Chadwick told shareholders the group continued to benefit from strong demand in the Republic and the improving environment in the UK. "Profitability in the first half is on target to exceed that of the same period last year."

In 1999, Grafton recorded a 35 per cent increase in pre-tax profits to €38.2 million (£30 million).