British construction management firm Interior Services Group forecast its 2012 group profit below expectations citing cancellations or deferring of projects by key clients in the UK retail sector.

With the reduced volumes and continuing pressure on margins, this is likely to result in our UK retail businesses delivering profits 3 million pounds less than we had anticipated, the company said in a statement.

Interior Services, which has been appointed to provide temporary spectator seating, tents and cabins at the London 2012 Olympic venues, said it would continue to diversify its earnings base away from UK and sees overseas businesses contributing 35 percent of profits for 2012.

The company, which has operations in Europe and Asia, said trading for the first half ended December was in line with its expectations.

In September, the company reported a marginal drop in its full-year adjusted pretax profit, but said it saw signs of rebound in the retail and construction sectors.

Interior Services shares, which have shed 20 percent of their value in the last three months, were indicated down 9 percent at 133 pence at 0743 GMT. The stock closed at 146.5 pence on Friday on the London Stock Exchange, valuing the business at 49 million pounds.

(Reporting by Juhi Arora in Bangalore; Editing by Maju Samuel)