BUILDING and support services giant Carillion, which is taking over Tyneside plc Eaga, has posted a strong rise in annual profits.

The Wolverhampton-based company said that, despite beating forecasts to post a 7.2% hike in pre-tax earnings to £188m, it still expected tough trading conditions this year.

Chairman Philip Rogerson said the company had a record pipeline of contract opportunities but was still seeing the effects of the global economic slowdown.

And the business, which last year saw turnover of nearly £500m said it is still targeting revenues of around £1 billion in the next three to five years.

Carillion said it had a forward order book worth £18.2 billion, up from £17.9 billion a year earlier as a surge in its support services contract pipeline to £8.3 billion from £5.5 billion offset falls elsewhere.

Last month Carillion agreed to buy Newcastle-based environmental services company Eaga for £306.5m. The deal is seen as good news for Eaga’s 4,000 staff after its business was hit by public spending cuts, particularly its contract for the Government’s Warm Front home insulation scheme.

And yesterday it said that it would focus on overseas growth and winning support services contracts in Britain as local councils cut costs and look to outsource services.

The company said: “We have also noticed that local authorities are looking to extend the range of services included in outsourcing contracts.

“We expect support services to continue to be resilient, despite our expectation that market conditions will remain difficult in 2011.”

Carillion said that it was well placed to achieve its objective of doubling revenues at its international businesses, while delivering substantial growth in support services at home.

Numis analyst Howard Seymour said: “Carillion is well placed to benefit from organic growth in its key markets as a result of its service offering.

“With the shares now trading around our target price we move to a “hold” recommendation (from “buy”), and would add that uncertainty on the Middle East and Eaga may keep a lid on the share price in the short term.”