Digger giant JCB warned its soaring sales growth was under pressure as the credit crunch slowed construction demand this year.
The privately-owned Staffordshire-based firm said 2007 was the most successful in its 62-year history, with sales up 31% to 72,000 units and pre-tax profits 25% ahead at £187 million.
But chief executive Matthew Taylor warned a downturn in the US construction market was spreading to Europe, and said booming emerging markets such as India and Eastern Europe were also showing signs of a slowdown.
He said: "Trading conditions throughout 2008 will continue to be difficult because of the credit crunch.
"There are signs that the downturn in the North American market is now spreading into some western European markets. The recent high growth rates in some of the emerging markets are also now showing signs of slowing."
Revenues for JCB rose nearly 30% to £2.25 billion last year. Emerging markets such as India, Poland, Russia, Bulgaria, Romania and South America provided the main source of business growth during the year.
JCB said its share of the world construction equipment market rose to 12% during last year, up from 10.4% in 2006.
Chairman Sir Anthony Bamford, son of founder Joseph Cyril Bamford, said: "2007 saw JCB make great progress and it was our best-ever year.
"The outlook for the remainder of 2008 does look challenging but I believe we are well-placed to adapt to these difficult conditions."
JCB was founded in 1945 and has 10 factories in the UK at sites in Staffordshire, Derbyshire and Wrexham. There are also manufacturing bases in the US, Brazil, Germany, India and China.
The firm employs around 6,500 people in the UK, and another 2,500 overseas.