Carillion’s Chief Executive John McDonough was confident the company would make gains from an increased demand for outsourcing from the government as it slashes costs, echoing a prediction from rival firm Serco which also posted increased profits this week.

“We can deliver 25 percent cuts for the government. We’re particularly focused on the local authorities area,” McDonough said, adding he wanted Carillion to take a slice of a £7 billion local authorities property services market in Britain.

Underlying pretax profit for the first half was up to £65.7 million ($102.3 million), against £61.6 million last year.

Revenues were down 11 percent on last year, however, to £2.5 billion as a result of the company disposing of its public private partnership investments.

The company said sales had also been hit by the timing of projects in the Middle East and losing a contract to manage insurance claims for financial firm Aviva after it decided to make the services in-house.

The order book for Carillion’s support services sector for the first half increased modestly to 11.3 billion pounds.

McDonough emphasized Carillion’s plans to grow its business in the Middle East, where it operates in Abu Dhabi and Oman, and in Canada. In both regions the company expects to grow revenues up to 1 billion pounds.

He also said the market for services helping clients to reduce carbon emissions would be a major one for Carillion in the long-term.

Panmure Gordon analyst Andy Brown said the results had come broadly in line with his own expectations, which were for underlying pretax profit of £66 million.

“Carillion continues to make steady progress ... this isn’t a set of results that will set the world on fire,” he said.

“The government needs to save money ... the volume of work and opportunity will be there, the interesting thing would be how the government decides to price these things,” Brown said.

Shares in Carillion were up 2.85 percent to 306.7 pence per share at 0755 GMT, outperforming the business support services index which was up 0.05 percent.