Fareham issued his warning as Billington recorded a pre-tax loss of £600,000 for the six months to June 30 compared to a £1.1m profit last time despite turnover ticking-up to £22.8m from £21.3m.

He said: “The number of business failures in the steelwork contracting sector remains relatively small, although with further increasing steel prices, recently announced, coupled with a harsh stance being taken by credit insurers, the directors believe there will inevitably be further casualties.”

Billington is braced for a slow construction recovery but is hopeful the market will pick-up next year.

Fareham said: “We are under no illusions, even though we expect margin pressures to ease in 2012; we realise that the construction market recovery will be a slow one.

“We remain cautious going forward, whilst positioning ourselves for growth.

“We have a strong balance sheet, the industry knowledge and relationships, to provide us with a degree of confidence in the current market conditions and look to 2012 with cautious optimism.”

The firm is still waiting to sign its first deal following the link-up with Bourne Steel to form the BS2 joint venture to go after larger commercial jobs in London.

Fareham said a number of developers are showing a “keen interest” and that the joint venture is looking to establish a turnover of between £10m and £20m

He told the Enquirer: “We have meet with most major developers to sound them out and they are very receptive to another major player in the market.

“We are being realistic and jobs like the Walkie Talkie and Cheesegrater towers are too big for us at the moment.”

Billington’s Easi-Edge safety barrier business is performing strongly despite the downturn and the firm has invested in new equipment as the Hoard-It site hoardings division also continues to grow.

Fareham said: “Easi-Edge has built up a reasonable percentage of the steel frame protection market and we are expanding in the timber frame sector.

“The hoardings business is also growing quite quickly and it shows that downturns do offer opportunities in niche areas.

“We have money in the bank but could look at more bolt-on businesses like this rather than structural steel acquisitions.”