Shares hit after trading statement reveals problems with a number of UK and Australian construction projects.

Mowlem has predicted a sharp fall in expected profit for the financial year. In a gloomy trading statement the contractor said that profit would be about £20m lower than market expectations.

The contractor blamed no single project for the profit fall but said that two thirds of the impact was caused by contracts in UK and Australian construction activities.

Mowlem said that it had restructured the UK Construction Services business at a cost of £6m, which will be reflected in interim results to be announced in September. Staff cuts will contribute towards a saving of £5m a year according to Mowlem.

For the first half of the year Mowlem reported the same level of activity as 2005 and a similar order book.

During mid-afternoon trading Mowlem’s shares had fallen 8% from 182p to 168p.