Greater profitability in the construction division at Kier will help to offset a slowdown in work at its housing arm, said the firm.

The company announced that profit for the year would be well ahead of expectations, despite the lull in the housing market.

However, in a trading update the contractor and developer said it expected housing sales to fall in the second half of the year.

It noted that a predicted recovery in the housing market had not occurred after the election.

Despite this, Kier said its order book for the first three months of this year was greater than projected sales.

Strong sales in the first half of the financial year ending 30 June led to a 5% rise in housing completions overall. The figure for total completions was 1215.