Problems with a string of contracts at the regional operations prompted Balfour to issue a £50m profit warning in April.

But Balfour bosses believe the problems have now been fixed and the revamped regions will lead the turnaround.

Balfour confirmed yesterday that its construction services division made a £41m loss during the first half of this year with the UK responsible for three quarters of that.

Chief Executive Officer Andrew McNaughton told analysts that most of the problems were now behind them and the company was looking forward to a “significantly better second half.”

He said: “The vast majority of problem contracts finished during the first half.”

Balfour has now changed its regional management team and revamped the structure with a series of branch closures.

McNaughton said the new team is “motivated to achieve its targets” with the ultimate goal of a return to 2.8-3% margins.

Finance Director Duncan Magrath said the split of work between regional projects and major schemes was roughly 50/50 during the first half of the year.

He said that balance would change during the rest of 2013 with a “shift to regional contracts from major ones.”

Balfour is targeting a £32m profit at its UK construction business for the rest of the year as costs are cut by a further £7m and the business is only hit by a £5m writedown compared to £45m in the first half.

McNaughton refused to rule out further closures.

He said: “We are not getting fixated on the number of business units.

“The business will change in shape as the nature of the regions changes.”