Trading update says group's UK civil engineering and Middle East arms did particularly well last year

Balfour Beatty issued an upbeat management statement this morning saying that trading in 2008 produced a year of strong progress.

The firm said its balance sheet remains strong, with average net cash for the second half of the year standing at around £250m. It added that its confirmed order book has increased from the £12.1bn reported at the half-year - although it did not say by how much - while pointing out that further “significant prospects” are likely to be secured in 2009.

The group's star performers last year included its UK civil engineering business, while its Middle East business, which is based in Dubai, also performed well on the back of infrastructure work.

Building work in both the UK and US experienced strong overall growth, although the firm admitted that one blot was a writedown on an unnamed building services contract.

Balfour Beatty said it expects to reach financial close on four PFI schemes in the first half of 2009 and added that it is continuing to benefit from growing spending in social infrastructure, such as schools and hospitals.

It added that work in the US and at its Hong Kong business, Gammon, is performing well but admitted that profitability at its rail business, which includes operations in the US and Germany, will be down slightly, “principally due to the timing of some settlements”.

The firm is expected to unveil its full-year results in March.