North Midland Construction PLC, which is listed on the Stock Exchange, said that pre-tax profits in the first half of the year were 60 per cent down on the same period last year.

The company employs more than 1,000 people on a number of different sites around the UK but it has not yet confirmed how many jobs will go.

Company chairman Robert Moyle said that the problem originated in company's North Midland Building Division, which saw sales fall from £21.4m in the first six months of 2007 to £14.5m.

'Tendering'

In a statement, he said: "The overall economic picture is becomingly increasingly difficult, with a general decline in tendering opportunities, project cancellations due to funding problems and rapidly increasing costs, most particularly in energy and materials.

"There is a need to enhance the size of the order book in the immediate future to achieve targets.

"The overall cost base has also been reviewed and, sadly, a redundancy programme will be implemented."

Mr Moyle added that the weakening economic conditions mean North Midland will not now hit its forecast £5m profit for the year.

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