Mike Welton has been with the company for more than 20 years

Releasing its interim results, the firm said Mr Welton would step down at the end of 2004. He has been chief executive for eight and a half years.

For the six months to 26 June, Balfour reported a pre-tax, post-exceptional profit of £61m ($112m), a 45% rise on the £42m interim profit made last year.

Turnover was up 14% to £1.99bn from £1.75bn for first half of 2003.

Mr Welton will be replaced as chief executive by Ian Tyler, 44, who has been chief operating officer of the group since July 2002.

Commenting on his decision to retire, Mr Welton said that after eight and a half years as chief executive and more than 20 years with Balfour, he believed the time was right to hand over to Mr Tyler.

"It has been a privilege to lead this company and I am confident that under Mr Tyler's leadership it will continue to deliver the reliable, responsible growth in shareholder value which we have achieved in recent years," said Mr Welton.

Balfour said its half year results reflected "significant underlying profit growth".

Looking ahead, it said all its key markets continued to be "positive".