Mowlem has issued a second profit warning in as many months, announced that finance director Gerry Brown was leaving the company, and appointed a replacement this week

Paul Mainwaring, the finance director of logistics group TDG, will take up the finance director’s post before the contractor’s annual general meeting in May.

He joins at a challenging time: Mowlem said last week that it expected to make a £7.5m loss for 2004, compared with a £45.2m profit in 2003.

The City and shareholders were warned in December that results would be hit by a £15m write-down on poorly performing contracts. This week it emerged that “accounting issues” within its M&E business would also affect results. A spokesperson for Mowlem said some contracts, dating back as far as 2001, had not made as much money for the company as expected.

Shares dropped 4% to 207.25p after the announcement.

The spokesperson said it had been agreed Brown would leave. He said: “Gerry has not been sacked as a result of the accounting issues within Mowlem Technical Services.”

He added that Mowlem Technical Services’ finance director, Toni Tait, will be leaving the firm shortly.

Simon Vivian, who took over from Sir John Gains as Mowlem chief executive in January, said: “I have been forced to take some tough decisions in respect of balance sheet issues across the business, but have felt it was in the best interests of Mowlem and its shareholders to take a prudent view.” He said that he was confident that Mowlem would turn the situation around and obtain good results this year.

Speculation that Mowlem was a prime takeover target continued this week. It is thought that a European company, most likely to be a German firm such as Hochtief or Bilfinger, is a possible match.