The dire statement to the Stock Exchange was in stark contrast to an upbeat set of results for the year to March 31 which were released in July and hailed a recovery in private sector work.

Chairman Michael Henderson said intense competition for work since March 31 has hit margins meaning “the full year results are likely to be lower than previously expected.”

The Arab Spring uprising has also led to a drop in work in the Middle East as projects are cancelled.

He said: “In the UK competitive pressures have continued to impact margins negatively throughout the period.

“While the first quarter of the financial year tends to be subdued, this trend has continued into the second quarter.

“In view of lower operating margins, we are taking action to reduce our UK and Middle East direct costs and administrative functions so that we can service the business with a more appropriate cost base.

“The costs of this restructuring will be recognised in the first half year as an exceptional item.”

The firm’s share price fell 18% in early trading this morning.