Morgan Sindall said Q3 revenue this year held-up well compared to 2012 but “group margin was impacted primarily by margin contraction in the Construction & Infrastructure division.”

The statement added: “In Construction & Infrastructure, there has been no significant change in market conditions or performance in Q3.

“The focus for the division remains on operational delivery, contract selectivity through the risk management of contractual terms and conditions and working capital management.

“As markets recover, upward pressure on material costs and subcontractor costs will provide additional management challenges.”

Fit out work was also flat but affordable housing work rose with sales up 41% in the first nine months of the year compared to the same period in 2012.

Even in the booming housing market Sindall warned: “However, there remains significant competitive pressure on construction revenue and margins, exacerbated by increasing material costs and subcontractor costs.”

The firm said annual results would be in line with the Board’s expectations and “looking further ahead, the Board remains confident that the business is well-positioned to benefit from profitable opportunities as its markets recover.”

The firm has undergone a series of recent management changes with London construction boss Peter Jacobs set to leave in February and fit-out boss Steve Elliot stepping down last month.