Support services group Interserve posted a pre-tax profit of £37.2m last week for the 12 months to 31 December, down £2.1m on the previous year.
The company had issued what was classed by the City as an unofficial profit warning in September, when chairman Mike Bottjer said that private sector clients were becoming more cautious in an uncertain market.

The fall in profit resulted in a share price decline last week of 5.4% to 183.5p. Financial group Old Mutual has downgraded its pre-tax profit expectation for 2003 for Interserve from £56.5m to £40m.

Old Mutual analyst Stephen Rawlinson said: "Interserve is probably paying the price for growing a little too rapidly, and expectations in the market getting ahead of themselves."

Interserve said its business was essentially strong, and that its net debt had been reduced by nearly one-third to £42.8m.