Terrible Scottish summer weather forced roadstone and building material group Ennstone to issue a profits warning yesterday and to accelerate efforts to sell parts of the business to cope with a cash drought.

Ennstone is part of the Bear Scotland consortium that maintains trunk roads in north-east and south-east Scotland. It also has extensive quarrying and concrete production operations, particularly in the north of Scotland.

The company blamed "severe weather" in Scotland and falling profit margins from its English operations, as the property market foundered, for its woes.

Ennstone, which is led by executive chairman Vaughan McLeod, said it "is likely to be substantially behind current market forecasts" for 2008 after a sharp downturn in business in recent weeks.

It added: "As a result of the deterioration in trading, and with the industry as a whole suffering from tightening credit terms, the group's cash position has also deteriorated."

Ennstone's shares fell 35.5% yesterday to 10p. A year ago they were trading at 45p.

The company's Scottish division, Ennstone Thistle, which it bought in 1997, employs around 400 people, out of a global workforce of 1700, at locations from Morefield Quarry in Ullapool to Orrock, Kirckcaldy.

It has profited in recent years by supplying roadstone to Bear Scotland, in which it is a member of a three-way partnership with Jacobs Engineering and roads contractor Ringway.

An Ennstone spokesman said that poor weather in Scotland over the summer hampered work on road programmes and had also delayed production from the company's quarries.

The acquisitive company, which bought 18 businesses in 2007 alone, had already warned the market in August that it needed an £11m boost by the end of the year to avoid breaking American banking covenants. It has also been negotiating to extend its UK banking facilities beyond 2010.

Ennstone said it does not believe its covenants or US banking facilities will be breached at the September test date "unless there is a further unexpected deterioration in the group's trading in the next two weeks". However, the company is "continuing its constructive discussions with its principal banks".

Yesterday, it admitted it would have to extend and accelerate a disposal programme that was originally intended to be limited to its US business. When asked if the company was considering disposing of any Scottish assets, a spokesman said: "They have not come to any conclusions really."

The firm said it is in ex-clusive talks with one company in relation to its Pennsylvania business. It added that it is implementing "a series of cost-reduction measures" and is also con-sidering an equity fundraising.

Although the company's operations in the US and UK have been struggling, its business in Poland has continued to perform well.

Bear Scotland yesterday emphasised its status as an independent firm, in which Ennstone is a shareholder but provides services on a tender basis. A spokesman said: "Bear Scotland is an independent limited company, which is continuing to perform well on its trunk-road contracts."