The firm said the decision was taken because the work undertaken by its Forefront Utilities business was loss-making.

Forefront Utilities will now continue with medium pressure replacement schemes in London and the South East. This market is driven by the long-term 30/30 iron mains replacement programme which gives good visibility to 2032.

Renew said the decision would cost the firm £5.8m and an extra £500,000 in redundancy costs.

Chairman Roy Harrison said: “The group decided to withdraw from its loss-making low pressure, small diameter gas pipe replacement activities and as a result has reviewed the carrying value of its investment in that business.

“Our gas operations are now completely focused on medium pressure activities which will result in lower revenue but which have been consistently profitable.

“Following these actions, the board expects that its gas business will return to profitability in the financial year ending 30 September 2018.”

The exit hit half-year profits, which were nearly halved at £4.8m compared to £8.8m previously.

Revenue rose 9% to £289m with pre-exceptional operating margin increased to 4.2% (2016: 4.0%).

Harrison added: “The board is confident that Renew will achieve its financial target of a 4.5% group operating margin and report results in line with market expectations for the year ending 30 September 2017.”