Outsourcing specialist WS Atkins has announced plans to cut 400 jobs, citing a decline in business from private sector clients.

This is a very disappointing performance and appropriate steps have been taken

WS Atkins statement

The company, part of a consortium bidding for a government contract to refurbish the London tube, said that market conditions had "deteriorated" this year due to investment cutbacks by private sector customers in the UK and North America.

The news was greeted with alarm in the City, where WS Atkins shares slumped by 137p - or 72.5% - to 52p on Tuesday.

The firm said the job cuts would save about �15m ($22m) a year, helping it to shore up its faltering financial performance.

Flat profits

WS Atkins said that, "subject to no unforeseen events", it expected pre-tax profits for the six months to March 2003 to match the �15.2m it made during the previous six-month period.

"This is a very disappointing performance and appropriate steps have been taken," the company said.

The company added that its chief executive Robin Southwell was stepping down.

WS Atkins chairman Michael Jeffries is to stand in as chief executive until a permanent successor is appointed.