Amec out to reverse its construction arm losses.

Project manager Amec says it has taken steps to revive its construction arm following half-year losses of more than pounds 20m at the division.

While revenues in construction rose 7% to pounds 577.6m ( helped by increased activity on contracts such as the building of Heathrow Terminal 5 ( losses widened by 61% to pounds 20.1m as a result of a poor performance on a number of contracts and under-recovery of overheads.

Amec, which employs around 600 people in Darlington, said new management at the division had been more selective about work taken on, while action is being taken to reduce the cost base. It is also withdrawing from North American construction work.

The losses in construction failed to prevent the wider group, which is focused on energy and process management operations, from improving half-year profits in continuing operations by 21% up to pounds 24.2m.

Exceptional items of pounds 64.9km, mainly relating to the exit of certain construction activities, produced group pre-tax losses of pounds 57.9m, against profits of pounds 18.7m a year earlier.

Amec said: "First half performance in the energy and process and investments businesses was stronger than anticipated, but within construction, UK building and civil engineering was poor. Steps have been taken to arrest this and improvement is expected."

Earlier this year the group announced the sale of Amec SPIE ( a specialist provider of services in the energy and rail industries ( as part of a major restructuring, which will see it separate its core energy and process management operations from its construction activities.