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Contractor Kier has reported a 9% rise in pre-tax profit even though its revenue fell 5% in the second half of last year.

The firm saw a profit of 拢34m compared with 拢31m in the second half of 2010 and revenue of 拢1.046bn compared with 拢1.097bn in the same period the previous year.

In an interim results statement to the London stock exchange it said construction revenue had dropped slightly from 拢728m in the last six months of 2010 to 拢720m in 2011. Revenue from its service businesses in maintenance, facilities management and environmental services fell more sharply from 拢243m in 2010 to 拢218m in 2011 over the period.

The sharpest decline was in the group鈥檚 maintenance service division, which it said was feeling the pinch of public spending cuts, particularly in capital expenditure. It said the decline in services work was principally to blame for the drop in group revenue.

The firm鈥檚 property arm also saw revenue shrink from 拢126m in the second half of 2010 to 拢108m in the second half of 2011, though profit tripled from 拢3.4m to 拢10m over the period.

Paul Sheffield, Kier鈥檚 chief executive, said the results were in line with expectations. 鈥淭he next 18 months will remain challenging as external macroeconomic factors weigh heavily on the public sector and the confidence of the private sector to invest. We will, however, continue to focus on those markets where we see the most potential for future growth,鈥� he said.

Sheffield said the group saw construction opportunities in the transport, waste and power markets.

Phil White, chairman of Kier, added: 鈥淎s we look to the medium term, conditions continue to be difficult in the UK construction market and we are inevitably seeing greater pressure on our current operating margins. In services, public sector outsourcing opportunities are taking longer to come to market and are often reduced in scale, which means the financial effect of any public sector outsourcing is not likely to be recognised until 2014.鈥�