BAM’s UK building and civil engineering business saw profits fall in the first half as inflation and supply chain issues eroded margins.

Building arm BAM Construction saw profits fall by 30% to £13.2m from revenue slightly down at £426m as the business ran into challenges, particularly on larger contracts.

The larger civils business, BAM Nuttall, fared better with stronger revenue up nearly 7% to £554m and profits down 13% at £14.4m.

Ruud Joosten, CEO of Royal BAM Group, said that despite the first half fall, the outlook for UK construction looked healthy.

He said that the UK building business had a healthy pipeline for education and opportunities in healthcare and regional frameworks.

There were also significant opportunities in the energy sector and a favourable rail market, while infrastructure was expected to be steady.

Recent project wins included additional works for HS2, two converter stations for SSEN Transmission and National Grid Electricity Transmission, a three-year contract with the Tudor Grange Academies Trust to deliver integrated facilities management services and a new school building at Sunderland’s Farringdon Community Academy.

Within the merged UK and Ireland division, the first half performance was better, driven by stronger profit returns from UK ventures and Ireland operations.

Revenue at the combined division was stable at £1.33bn with profit up nearly a third to £54m.