Construction firm T Clarke has issued a warned over profits following a squeeze in margins and the disruption to building work caused by December’s Arctic weather.
The firm said the construction industry had been extremely competitive throughout 2010 but the final quarter of the year was “particularly challenging”.
Shares slumped 19% after the company issued the alert on 2010 results and said its performance in 2011 could be worse.
Its grim news comes after Markit/CIPS data earlier this month revealed that the construction sector declined in December as it recorded its lowest level of activity for 20 months hindered by the snow.
But T Clarke, which is currently working on the Olympic Stadium in London, said its longer term prospects were encouraging and it believes it is well positioned to benefit from an upturn in the construction industry.
Chief executive Mark Lawrence said: “Whilst the competitive market has adversely impacted the group’s performance, we remain confident about the long-term potential. There are a number of significant projects commencing over the next 12 months.”
Margins across the sector remained under “extreme pressure” despite the revival of some projects in areas such as London, according to T Clarke.
But the firm said it had a current order book of £190 million of work compared with £160 million a year ago.
The company is working on several projects including a flight crew training centre for Oxford Aviation in Greater Manchester, the redevelopment of the Gateshead International Stadium and a project at the ITV Studios in Leeds. It also hopes to win contracts for several large office schemes that are planned in London.