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Carillion鈥檚 profit increased by 7% in 2010, as a focus on margins across its businesses delivered strong results.

In the financial year to 31 December the company made a pre-tax profit of 拢188.1m, up from 拢175.5m during 2009. Its sales fell by 9%, ending the year at 拢5.1bn, down 9% from 拢5.6bn a year earlier.

In a positive results announcement, Carillion said its cash holdings more than quadrupled to 拢120.2m, while its order book increased to 拢18.2bn from 拢17.9bn, despite the sales of PPP investments reducing it by 拢500m.

Revenue from Carillion鈥檚 UK construction business was 拢1.7bn during 2010, down from 拢1.8bn in 2009 - a reduction of 7%.

This is in line with its target to reduce UK construction revenues to 拢1.2bn over the next few years as it focuses on higher-margin work, as well as construction in the growing Canadian market.

Overall, profits in its construction business increased by 33%, rising from 拢30.9m in 2009 to 拢41.2m last year.

Pointing to an increasingly competitive UK construction market, Carillion chairman Philip Rogerson said: 鈥淭ightening our already selective approach to UK construction is helping to support margins by enabling us to avoid bidding for lower-margin work.

鈥淲e believe this will become increasingly important, because market conditions are expected to become more competitive as a result of the UK government鈥檚 decision to reduce capital investment in real terms by around one third over four years.鈥�

Carillion鈥檚 rival, Kier, released its results last week and said it increased its profits in the second half of last year. Work already in its order book has secured all of its target revenue for 2011, while it also has 65% of revenue for 2012 in the bag.

In a strong set of figures for the first half of its financial year, for the six months to 31 December, Kier said its revenue was 拢1.1bn, compared with 拢1bn in 2009.

It made an underlying pre-tax profit of 拢31.3m in the last six months of 2010, compared with 拢24.8m in 2009, up 26% - although this excludes a profit in that year of 拢7.1m from a sale of land held by its Partnerships Homes division.

Paul Sheffield, chief executive of Kier, said a focus on 鈥渒eeping on top of the cost base鈥� has helped with margins, while 鈥渨ork has kept flowing in and a focus on efficiency has helped convert this work to profit鈥�.

Kier鈥檚 order book for construction and support services was steady at over 拢4bn, the company said. Sheffield added: 鈥淩evenues grew in the support services division and we have had a good period [in terms of contract wins] but the market has got more competitive over the last few months.鈥�