Construction company Costain said it was in talks with its bankers after outlining £42m in write-downs, which analysts warned would lead to a "sizeable loss before tax" this year.
The group added it had cancelled plans to resume dividend payments this year, sending shares down 17p to 45.25p.
Costain, which had already announced substantial write-downs at its interim results this summer, said it had made further provisions in its building division and COGAP, its oil and gas unit.
COGAP saw one of its projects in Mexico suffer cost over-runs, which the group said would knock £3m off its results for 2006.
Andrew Wyllie, the chief executive, said: "COGAP hasn't performed well but we have taken definite action in terms of refocusing the strategy." The company said it was reviewing "a range of options".
The building unit continued to underperform in the second half of the year, and the group said further cost over-runs and re-assessment of contract values and risks would reduce results by another £5m, bringing total cost over-runs to £8m.
The company said the division's management team had been "substantially" restructured and a new managing director appointed. Analysts at Numis Securities said: "We believe that the new management now in place in the building division should be taken as a positive although we caution that turnaround will be gradual."
Mr Wyllie said there were a number of contracts currently subject to dispute, and the company had thought it appropriate to make a £36m provision. He said: "It's not good news, but it's the right thing to do."
Finally, a £6m provision was made relating to the closure of group's international unit last summer.
Analysts had expected Costain to make a pre-tax, pre-exceptional profit of around £21m, but now expect around £13m, allowing for the £8m cost over-runs.
Numis Securities said the group would report "a sizeable loss before tax in 2006" if exceptional items were taken into account. In comparison, Costain posted a £25m pre-tax profit last year.
Mr Wyllie said the company's talks with its bankers were positive, adding these had indicated they intended to negotiate waivers for any covenant breaches that may arise.
But there was some hope for 2007. Mr Wyllie said the civil engineering division, which accounts for 80% of the order book, and the property development unit were in good shape.
He added that he saw a "significant recovery" in the group's underlying performance next year. Numis Securities said: "We expect the majority of negative news to be out of the way. Shares should begin to recover over the medium term."