A CONSTRUCTION firm, which employs about 600 North-East workers, says it is focusing on regional work after admitting its major UK project order book remains weak.

Balfour Beatty, which has offices in Middlesbrough, Sunderland and Newcastle, fears a lack of large infrastructure projects will hit its construction division.

Bosses say its engineering services business, which relies on major infrastructure and complex building work to grow, also remains subdued, with its UK rail project arm expected to deliver modest losses for the full year.

Earlier this year, Balfour revealed disappointing half-year results in its construction services division, with revenues falling from £3.3bn to £3.1bn.

The company, which helped build the £269m London Olympic Games swimming centre and a Heathrow Airport passenger terminal, employs 112 construction workers across Newcastle and Sunderland, and has a 50-strong Middlesbrough power distribution team, who work alongside National Grid and Northern Powergrid.

The firm yesterday revealed its third quarter results for June 29 to November 4.

A spokesman said: “We expect the UK's ongoing recovery in the housing market to feed through into increased work for our regional business.

“However, we need to remain vigilant about costs and the risk of subcontractor failures, as their balance sheets will come under increasing pressure due to increasing working capital requirements as and when their volumes pick up.

“In the major projects business, there continues to be an absence of large infrastructure projects.

“The visible pipeline looks weak, and we see little prospect for change in the next couple of years.

“We therefore anticipate a continuing shift in our business mix away from major infrastructure and into regional work.

“Our engineering services business also relies on major infrastructure and complex buildings for growth and consequently, its outlook remains somewhat subdued.

“The UK rail projects division remains difficult and we anticipate that it will be modestly loss-making for the full year.”

It said trading in its professional services business remained stable after gains in Asia and the Middle-East were offset by a fall in work and prices in Australia.

Bosses said average net debt for the nine months to the end of September was £345m, and expect year-end net debt of about £350m.

Balfour previously completed work on a £21m sea defence project in Redcar, and is carrying out a civil engineering project to build a dual carriageway on the former Vaux brewery site, in Sunderland.