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Morgan Sindall has issued a profit warning this morning after being hit by problems on a handful of problem construction contracts in London and the South-east.

In a trading update for the period from 1 July to today, Morgan Sindall said the firm鈥檚 performance had been hit by 鈥渁 small number of construction contracts in London and the South which have experienced timetable slippages and increased estimated costs to complete鈥�.

鈥淎s a result, the board now expects the full year result will be below previous expectations,鈥� the firm added.

Morgan Sindall said it now expected its full-year operating margin to fall from 1% in 2013 to around 0.3% - 0.5%.

The firm said the deterioration related to 鈥渁 small number of fixed price construction contracts which are due to complete within the next six months and were procured over a year ago鈥�.

The firm added: 鈥淎dditional resources have been required to complete these contracts which, when added to inflationary pressures since contract win, have increased forecast costs to complete.

鈥淎lso, where programme overruns are now anticipated, forecast contractual penalties have further increased the potential contract costs.鈥�

Morgan Sindall also said it had been hit by the fire that destroyed its 拢16m carbon neutral laboratory project for GlaxoSmithKline at the University of Nottingham (pictured)..

With work expected to be completed in early 2015, prior to the fire which destroyed the building, the firm said it therefore 鈥渢he loss of expected contribution from the time of the fire up to completion has further impacted divisional performance鈥�.

The firm added that the other parts of its business, were all performing well, with the fit out business now expected to perform above expectations over the full year.

It said the infrastructure and affordable housing businesses were trading in line with expectations.

John Morgan, Morgan Sindall chief executive, said: 鈥淲e are obviously disappointed that a small number of construction contracts in London and the South have been impacted by timetable slippage and increased estimated costs to complete.

鈥淭his is a short-term and localised issue which is receiving the highest level of management attention and which should be worked through over the next six months.

鈥淭he rest of the business is performing well, particularly fit out.

鈥淲e firmly believe that the medium and long term opportunities and prospects for the group remain very attractive.鈥�