Shares in Grafton reached an all-time high yesterday after the firm said it would meet profit forecasts for last year and signalled good prospective growth for 2005.

In a trading update released to the market yesterday, the merchanting group said that turnover for 2004 had risen by at least 25 per cent to €1.87 billion, while profits for the year are expected to be "in line with market expectations".

Grafton also indicated that trading at its acquisition target, Heiton, had been strong in the period up to the end of its accounting year in October 2004.

Grafton is on the point of completing the purchase of Heiton for €336 million.

"Their financial results for this period are ahead of our expectations," Grafton said.

Grafton expects acquisitions made over the past year, including Heiton, to boost sales by almost €700 million in 2005.

Grafton spent more than €69 million on 17 bolt-on acquisitions in the UK last year, with more than half of these coming in the second half of the year.

This should provide 80 new trading locations for the group, according to the update.

Grafton pointed towards further bolt-on in 2005, noting that it expected to "benefit from its healthy pipeline of potential acquisitions".

The group also signalled further growth for this year in its merchanting and dry mortar operations.

Shares in Grafton surged after the release of the update, hitting a new high of €9.15. They closed at €9.13, 46 cents ahead of Tuesday's close.

NCB analyst, Mr John Sheehan, is expecting Heiton to provide a major "kicker" for Grafton in 2005. He is expecting earnings per share of 55.1 cents for 2004, with this to rise to 67.5 cents in 2005 and to 75 cents in 2006.

This would equate to earnings growth of 22 per cent in the current year.