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By Bill Fishlock.A cautious but encouraging tone has emerged from the annual reports published by major contractors to date.At Wimpey, chief executive Joe Dwyer wrote 'trading remains difficult in many areas of our activities and it will take time before our profits return to a satisfactory level'. Tight economic restraints in both the UK and US means recovery is likely to be modest in both its main markets.But Mr Dwyer was optimistic about UK house building after an increase in volumes and a doubling in margins last year.Having transformed the balance sheet he said the group's strategy now rested on concentrating its housing operation on the UK and US. Its French housing operations are to be wound down. Wimpey's construction arm will pursue more multi-discipline projects and aims to increase its international spread. Significant investment is planned at the group's UK and North American minerals businesses.At John Mowlem, which is pulling out of private house building, chairman Sir Philip Beck said contracting margins continued to be under pressure in the UK. He said the industry was placed between slowly growing demand and cost pressures which are building up as the supply and subcontract sectors reduce over-capacity. But he believes underlying margins are likely to improve.Sir Philip added that prospects for SGB, the group's scaffolding operation, looked encouraging. CONSTRUCTION NEWS