A City analyst said Skanska's announcement could be the first of many profit warnings as the downturn worsened. He said: "This is the first major confirmation it's getting worse out there."
Skanska, the world's fifth largest construction group, said the difficult economic conditions in Poland and the Nordic region was another reason for the fall in profit.
But the company said its US businesses, which account for 40% of its turnover, had not suffered any cancelled projects after the terror attacks last month.
Skanska's profit warning caps a grim week for the industry with news that construction output will fall next year and the RICS' latest survey showing commercial sector confidence declining sharply.
There are also growing concerns about consumer and business confidence after the terrorist attacks on the USA and the subsequent war with Afghanistan.
