DIGGER giant JCB says it expects to see a "significant improvement" in both sales and profits this year.

The comments came as the Rocester-based manufacturer posted pre-tax profits of £29 million for 2009, up from £28 million the year before.

Turnover was down by a third, to £1.35 billion.

The firm said it was encouraged by the performance in the face of a global market that fell by 46 per cent last year.

With total sales of 36,000 machines, JCB increased its market share to an all-time high of 12.2 per cent to reinforce its position as the world's third-biggest construction equipment manufacturer.

Chairman Sir Anthony Bamford said "tough action" had helped the firm improve its profitability.

JCB employs about 4,000 people in Staffordshire.

Since summer 2008, it has axed about 1,800 employees in a bid to cut costs and keep production levels down.

But in April it announced shop floor workers would receive a three per cent pay rise and that it was planning to take on up to 200 more staff.

Sir Anthony said: "2009 was hugely challenging for the construction equipment industry.

"The entire JCB organisation pulled together magnificently to respond decisively to the unprecedented downturn, which was particularly severe in the first half of the year.

"Tough action was taken to adjust our cost base to align it to a much reduced level of demand, and this resulted in an improving profit trend as the year progressed.

"We have created a strong platform for renewed profitable growth."

Sentinel Business reported on Monday that JCB was embarking on a £20 million investment in a new generation of its backhoe loader, which was pioneered by founder Joseph Cyril Bamford in 1953.

The first 'eco' machine that rolled off the production line at Rocester, pictured below, was decorated in Union Jack colours to celebrate its launch and the company's forthcoming 65th anniversary in October.

Sir Anthony said: "Despite the economic difficulties, we continued to invest in new products, with 11 innovative machines launched so far this year including the most fuel-efficient backhoe loader we've ever produced.

"JCB's backhoe already leads the market on fuel efficiency and the new eco backhoe offers customers fuel savings of up to 16 per cent compared to the outgoing model, setting a new standard in backhoe technology and placing us in a strong position to capitalise on improving market conditions."

Sir Anthony said that during the first half of the year the construction industry had seen a "strong recovery" in emerging markets such as India, China and Brazil, although the traditional markets of Western Europe and the U.S. remain weak.

He added: "On balance, we expect to see a significant improvement in both sales and profits this year compared to 2009."

Gordon Richardson, works convenor for the GMB union, said: "We have been witnessing an increase in production along with the return of some old faces.

"It's nice to see some of the old guys coming back into meaningful employment. Even if it is in agency roles, at least it's a step in the right direction.

"One thing we are pleased about is the introduction of the eco diggers, because the union has pledged to support green issues which create meaningful employment."