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Carillion expects market to remain 'challenging'

Carillion has announced it expects the market to remain ‘challenging’ as it looks to decrease the size of its UK construction business.

Despite revenues dipping below those announced at this time last year, the contractor said it expected an increase in earnings in 2010, while its support services arm could benefit from government spending projects.

It said: “We continue to expect market conditions to remain challenging… Furthermore, the cuts in UK public expenditure announced in the UK Government’s Emergency Budget on 22 June 2010 are in line with our plans for reducing the size of our UK construction business and have the potential to create opportunities for our largest business, support services, over the medium term.”

Carillion generates considerable revenue from government work and Public Private Partnership projects and it anticipates that investments in PPP will continue to generate “substantial value”.

It has maintained a positive net cash position for the first six months of 2010.

The government’s announcement of cuts in the BSF scheme are expected to have little material impact on the firm’s £19.7 billion order book, while only £0.5bn of that £19.7bn is expected to relate to probable orders from the public sector.