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Wates has broken through the 拢1bn-turnover barrier for the first time in its 111-year history.

Paul Drechsler, the chief executive of the family-owned contractor, said the target had been hit a year ahead of schedule.

Wates joins a group of about 10 firms in the 拢1bn-plus bracket, including Kier, Laing O鈥橰ourke and Balfour Beatty.

Drechsler said: 鈥淭he goal we set in 2004 was 拢1bn turnover by 2010. It鈥檚 an important milestone but the key is not the size of the business but the profitability.鈥�

Turnover rose 6% from 拢949m to 拢1bn in the year to 31 December 2008, and pre-tax profit grew a quarter from 拢37.6m to 拢47m, producing a margin of 4.7%.

Despite the rise, Drechsler conceded that profit margins would come under pressure this year as the recession deepened, although he said the company would not chase work at any cost.

There are some companies out there pricing jobs at ridiculous levels

Paul Drechsler, chief executive

鈥淚n an industry where the average margin is 2.5% in the good times, there are some companies out there pricing jobs at ridiculous levels. We won鈥檛 do that and have lost several jobs by a price difference that an O-level student could see was untenable.鈥�

He said companies submitting low bids in an attempt to win work could do long-term damage to the industry. 鈥淵ou know that in 12 or 24 months the outgoing price for some jobs will bear no relation to the ingoing price despite all the good advice the industry had from the Latham and Egan reports.鈥�

Elsewhere, he said the company was looking at opportunities in the Middle East, although he stressed that it was not poised to sign any deal. He said: 鈥淲e鈥檝e appointed our Midlands managing director Matthew Kennedy to find the right partner in the region.鈥�

He suggested Abu Dhabi was the primary target given the fact it has 鈥渕ore certainty and resources鈥� over the long term. 鈥淚 don鈥檛 underestimate the capacity of the Middle East market to recover. It鈥檚 all about finding the right partner, though. If we did go in it wouldn鈥檛 be gently because of the scale of projects.鈥�

The company ended the year with 拢170m in the bank. Drechsler said: 鈥淭he camel has enough water in its hump to keep going but this is a multi-layered and multi-faceted recession.鈥�

He added that it was unlikely Wates would get through 2009 without redundancies, although he could not give numbers.