Esh streamlined its operations last year as part of a drive to secure more work in the face of increasing competition from major contractors chasing smaller jobs.

Esh chief executive Brian Manning said: “It is difficult as a medium size business to compete against nationals in public procurement contests.

“We are though seeing signs that procurers are becoming more receptive and starting to understand the value of having businesses of Esh Group’s technical and financial strength, which commit to local investment and employment, as an alternative to the nationals.

“Private construction companies with our balance sheet are rare and we are working really hard to maintain our market.”

His comments came as Esh unveiled a drop in operating profit to £2.1m during 2011 from £5.9m last time on turnover steady at £170m.

The fall in profits was blamed on investment costs setting up new operations in Yorkshire and Cumbria and a continuing squeeze on margins

Dunelm Homes – the group’s house building business – continued to be a drag on results despite beating sales targets.

Manning said: “These figures come as no surprise; the market is weak.

“Although we are pleased to have maintained overall turnover at Esh Group we live by the saying; ‘turnover is vanity, profit is sanity and cash is King’.

“That’s our focus, we are managing costs, we are profitable, we have a strong balance sheet and a healthy cash position.

“Although house building is still affecting profits the team is doing very well, their sales are ahead of target and the finances of the business are contained.

“So, in short, we’re strong and we’re working hard for our clients.”

Chairman Austin Donohoe said the firm would continue to expand ouside of its traditional north east market.

He said: “Esh Group is in a strong position to ride out the construction market downturn.  We’re committed to a clear strategy which is working.

“We will continue to look outside the North East, which is being hit harder than most as far as construction goes, to develop our business.”

Manning added: “Although we’re ahead of plan for 2012 the lack of visibility of forward workload is a real problem; it’s very difficult to project beyond 6 to 8 months.

“One thing we won’t be doing is moaning; we’ll keep working hard and exploring all means to move the business forward.

“In the main we are happy that we are doing all we can and we’re very proud and pleased that our people are responding to the challenges.”