Builders' merchant Travis Perkins has revealed a series of cost-cutting measures as it braces itself for a "rapid decline" in activity.
The DIY and building supplies firm, which also trades as Wickes, said trading in recent weeks had been below earlier hopes and that profits for 2008 were now likely to be at the bottom end of City forecasts.
It is unlikely to pay a full-year dividend, while it will also cut capital expenditure and reduce general costs by £30 million in the next year.
Travis shares fell 19%, with the update also causing falls for B&Q owner Kingfisher and Howden Joinery firm Galiform. The company said the anticipated downturn in the construction sector was developing at a quicker-than-expected pace.
It said: "In recent weeks, trading has been below earlier expectations with both the merchanting and retailing businesses experiencing more difficult conditions as sentiment in construction markets has reacted to the extraordinary turmoil in financial markets.
"This, together with continuing negative trends in leading indicators, leads us now to expect a more rapid decline in market activity, although our view of the scale of the likely downturn has not materially changed."
The company stressed that it maintained "significant headroom" against a £1 billion loan facility agreed in April.
Seymour Pierce analyst Kevin Lapwood said: "Given the current state of the UK house building market, it would have been optimistic in the extreme to expect much good news from Travis Perkins in the third quarter.
"The only questions were how bad would it be and was the outlook so bad that debt covenants were soon to breached. The answers are that trading is worse than expected but current debt covenants appear to be secure for the time being at least."