Midland civil engineering contractor Barhale Construction says it is "steaming ahead profitably" after a difficult 16-month period.

The Walsall company said during the 16 months to December 31, 2005 it experienced difficult conditions caused by delays in the start of water industry contract work-loads and in reduced workloads in telecoms.

Turnover came in at £ 118 million, against £120 million for the 12 months to August 31, 2004.

Group operating losses totalled £2.2 million before one-off exceptional items of £1.4 million.

In 2004 the firm made a profit of £543,000.

Barhale says it is now focused on core long-term water industry framework contracts, plus controlled growth in non-framework civil engineering.

Barhale added a recent water industry framework following an award of contract with Scottish Water Solutions.

The company said chief executive Steve Martin tendered his resignation at the start of 2006, and ceased active involvement in April.

Chairman Dennis Curran said: "We have been through a difficult period but Barhale is now most definitely back on track and steaming ahead profitably."

He added: "Barhale has traded profitably throughout the first six months of 2006 - and is over 50 per cent ahead of profit targets for the half-year.

"Workload volumes of key framework contracts have returned to expected levels and the telecommunications contract, which contributed to losses in the previous period, has returned to profitability.

"There were clearly identified reasons why we faced difficult trading conditions but I am pleased to say those are behind us. We have enjoyed a strong first six months in 2006 and look forward to a buoyant year."

Meanwhile, Mr Martin said: "I revised the company strategy to concentrate principally on core water industry activities and with these workloads back to expected levels the company is once again trading profitably with a forward order book in excess of £250 million."

He added: "This is the ideal time for me to move on as it enables the board of directors to consider their mid-term strategy during a period of stability and profitable trading."

Mr Martin also said major contractors have already been in touch with him regarding potential future roles.