British construction group Kier reported a higher full-year underlying pretax profit citing a strong performance at its property division and said it expected this positive trend to continue for the full-year.

However, the company said it expected the next 18 months to be challenging as external macroeconomic factors weighed heavily on the public sector and the confidence of the private sector to invest.

As we look to the medium term, conditions continue to be difficult in the UK construction market and we are inevitably seeing greater pressure on our current operating margins, the company said in a statement.

July-December underlying pretax profit rose to 34 million pounds from 31.3 million pounds last year.

Operating profit at the company's property division -- which provides property development, structured property financing and private and affordable housing -- rose to 10 million pounds from 3.4 million pounds a year ago.

However, revenue fell nearly 5 percent to 1.04 billion pounds, hurt by a decline in public sector outsourcing opportunities in its services division.

The company raised its interim dividend by 7.5 percent to 21.5 pence.

Kier shares closed at 1489 pence on Wednesday on the London Stock Exchange, valuing the business at 581.8 million pounds.

(Reporting by Juhi Arora in Bangalore; Editing by Roshni Menon)