Carillion can gain from public spending axe

Carillion today said it expected an increase in profits this year, and hopes its support services arm can benefit from government spending cuts.

The building and support services group, which generates much of its revenue from government work and public private partnership projects, said investments in PPP continued to generate "substantial value" and it expected to maintain a positive net cash position for the first six months of 2010.

"The group has continued to perform well despite market conditions remaining challenging. Underlying earnings per share are expected to increase, more than offsetting the effects of disposing of two non-core businesses," the company said.

Last month Carillion sold its investments in the Queen Alexandra Hospital PPP project to HSBC Infrastructure Company Limited for £31.3 million.

"Cuts in UK public expenditure ... 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," the company said.