North Midland is forecasting a small pre-tax profit on the quarter to September 30 2012 on a turnover of £38m.

The company said: “Revenue and profitability continue to be affected by a reduction in public expenditure and a major downturn in activity within the telecommunications sector.”

North Midland launched a cost-cutting drive this summer and losses within the building and civil engineering division have been “significantly reduced”.

A major loss-making contract which has blighted the firm for years will be completed early next year and the resulting contractual claim will rumble on.

Specialist water business Nomenca continues to perform well and the year end result will be in excess of that for 2011.

The highways division has been hit by delays in starting secured contracts and public expenditure cutbacks on its existing frameworks.

The company said: “The division remains profitable, but both profit and revenue will be below that of the previous year.”

The utilities division has been severely affected by a significant downturn in expenditure by the telecommunications companies.

The division has re-organised and downsized which has cut losses.

The current group order book for 2013 stands at £90m compared with £70m at the same time last year.