Construction sector boost

New public projects are boosting construction firms

Two UK construction firms have said they are optimistic about prospects for the year as higher public spending continues to provide a string of business opportunities.

The comments from Amec and Costain Group executives came as the companies announced rising first-half profits.

Amec said half-year pre-tax profit before goodwill and one-off items rose to £32.4m ($47m) compared with £27.4m in the corresponding period last year.

Turnover for the period stood at £1.69bn, up from £1.44bn.

Costain reported pre-tax earnings of £2m, up from £0.2m on sales of £195.6m in the six months to June.

Growing source of value

Amec chief executive Peter Mason said the government's public-private partnership schemes continued to provide good prospects for the company.

"Our portfolio of these projects represents a growing and highly significant source of value," he said.

There were also opportunities in the United States where the government was launching a major spending programme, with $217bn earmarked for infrastructure.

Pipelines and power sector work had emerged in continental Europe, he added.

Amec also benefited from high oil prices, which allowed energy firms to lift spending on capital projects.

Among its larger projects, Amec is working on a £235m contract to build an ethane recovery plant for Saudi Arabia's national energy company Saudi Aramco.

Order book rise

Costain said it expected its turnover for the year to be in line with 1999, although it was confident of winning a number of UK contracts and was currently pursuing road and rail contracts worth about £1bn.

The order book at the end of the first half was up 70% from last year, Costain said.

Work was progressing well on major projects including the £124m A2/M2 road project in Kent - being undertaken in joint venture with Sweden's Skanska and the UK's Mowlem - and the M5 Avonmouth Bridge strengthening project.

"The government's commitment to a long-term transport programme is good news for the construction sector as is the commitment to increased expenditure on health and education," Costain chairman Dato' Jaafar bin Dato' Abdul Hamid said.