A leading West Sussex engineering firm has warned of a tough year ahead, raising fears of job losses.

Auto engineering group Ricardo, which employs about 700 people at its base in Shoreham, said 2003 has been its most difficult year for a decade.

Reporting the company's results for the 12 months to June 30, chief executive Rodney Westhead said: "2003 saw the toughest trading conditions Ricardo has seen for ten years.

"2004 is expected to be another difficult year as current trends and growing competitive pressures in the automotive industry create greater uncertainty.

"As a result, order cover is being received for shorter periods and this makes it much more difficult to get a clear picture of how the current year will unfold at this time."

Mr Westhead's comments saw 28 per cent wiped off the company's share price.

Ricardo managed to maintain pre-tax profits close to previous levels - at £16.2 million against £16.7 million the year before.

But a spokesman for the company could not rule out job losses.