Carillion, which generates much of its revenue from government work and Public Private Partnership (PPP) projects, said its support services unit continued to benefit from long-term public sector contracts and that the economic downturn was creating a range of opportunities for the division.

"In the current economic climate, public and private sector organisations are increasingly seeking opportunities to reduce costs through outsourcing facilities management and other non-core services," Carillion said in a trading statement on Wednesday, ahead of its half-year results on August 27.

"We expect to build on our strong first-half performance and achieve our objective of delivering materially enhanced earnings in 2009."

Carillion posted a pretax profit of 53.6 million pounds for the six months to the end of June 2008 and analysts expect the group to report a profit of 179 million pounds for 2009, according to Reuters Estimates.

The company, which manages much of Britain's rail and motorway networks, said margins were improving and that it was benefiting from integration cost savings following last year's acquisition of Alfred McAlpine.

Carillion expects to save 35 million pounds annually in 2009 and 50 million pounds in 2010.

The firm said trading in Britain's non-housing construction market remained challenging but it was being selective about the projects it takes on.

Carillion said its Middle East construction services business would increase 2009 revenues to around 600 million pounds from 464 million pounds in 2008 at margins of around 6 percent due to its strong order book in the region.

It said net borrowing at the half-year would fall to around 150 million pounds from 226.7 million at the end of 2008.

Shares in Carillion were up 1.3 percent at 252.25 pence in early trade in a falling market, valuing the company at just over 1 billion pounds.

(Reporting by Rhys Jones; editing by Will Waterman)