May Gurney is factoring in at least a 10% drop in highways maintenance spending this year after posting a record set of results.
The firm currently maintains over 38,870 kilometres of roads and more than 500,000 street lights and illuminated road-signs.
May Gurney is confident the outsourcing trend will continue as councils look to increases efficiency as results for the year to March 31 2011 showed pre-tax profits up 13% to £24.3m on turnover up 18% to £571.4m
The firm said: “Highway Services has delivered a strong performance during the year, underpinned by essential maintenance-based income streams – crucially, the services we deliver are often safety related – such as highways drainage, winter maintenance or street lighting.
“The first half of the year saw a stronger performance than previous periods due to the positive impact of good early summer weather and a severe winter. In addition, the second half was better than expected due to extra government funding for pothole repairs and clients continuing to spend at existing levels ahead of the impact of the CSR.
“As previously guided, we have factored in an expected overall reduction in highways spending across our highways contract portfolio of over 10% in 2011/12.
“Although expenditure on roads in general has come under pressure due to the public sector spending squeeze, this has generally impacted larger capital projects.
“Expenditure growth on more safety-critical routine maintenance (May Gurney’s target market) is less affected. In addition, the recent budget announcement reflected the Government’s recognition of the importance of extra investment on routine maintenance of the road network.”