Carillion chief executive Richard Howson has stepped down after the company warned that its annual results would be “below management’s previous expectations”.

In a half-year trading update, the construction and infrastructure firm downgraded its full-year revenue guidance, with sales now expected to be between £4.8 billion and £5bn.

In addition, following a review carried out by KPMG, the group said it will book an £854 million provision linked to certain UK and overseas contracts.

A total of £375m relates to the UK and £470m to overseas markets in the Middle East and Canada.

Mr Howson will be replaced as chief executive by Keith Cochrane while the company looks for a permanent boss.

Meanwhile the Board said it has now begun “a comprehensive review of the business and the capital structure, with all options to optimise value for the benefit of shareholders under consideration”.

Philip Green, non-executive chairman, said: “Despite making progress against the strategic priorities we set out in our 2016 results announcement in March, average net borrowing has increased above the level we expected, which means that we will no longer be able to meet our target of reducing leverage for the full year.

“We have therefore concluded that we must take immediate action to accelerate the reduction in average net borrowing and are announcing a comprehensive programme of measures to address that, aimed at generating significant cashflow in the short-term.

“In addition, we are also announcing that we are undertaking a thorough review of the business and the capital structure, and the options available to optimise value for the benefit of shareholders. We will update the market on the progress of the review at our interim results in September.

“Richard Howson has stepped down as group chief executive and from the board with immediate effect.”

Shares in Carillion fell over 35% in morning trading to 122.1p.