A CONSTRUCTION firm employing about 600 North-East workers says challenging UK markets have hit profits.

Balfour Beatty, which has offices in Middlesbrough, Sunderland and Newcastle, says underlying pre-tax profits fell 32 per cent to £187m for the year ended December 31.

The company also saw underlying profits from operations drop 29 per cent from £284m to £203m.

Bosses say the results were driven by the difficult UK construction industry and challenging Australian natural resources sector.

The company employs more than 110 construction workers across Newcastle and Sunderland, and has a 50-strong Middlesbrough power distribution team, which works alongside National Grid and Northern Powergrid.

Andrew McNaughton, Balfour Beatty chief executive, said: “We faced challenging economic conditions in 2013 in several markets and experienced operational issues in UK construction.

“We are seeing increasing evidence of improving conditions in some parts of our core US and UK markets, although the long cycle nature of our business means these will take time to feed fully into our financial performance.”

Last month, Balfour secured a £75m deal from Network Rail to design and install electrification equipment on Lancashire rail routes.

It previously helped build the £269m London Olympic Games swimming centre.