It also announced the withdrawal of the dividend and "certain accounting errors" in its accounts. Finance director Nicholas Morgan offered his resignation which has been accepted with immediate effect.
Richards, which makes steel support systems used in bridges and power stations, reported profits of pounds 276,000 last year and was expected to increase profit to around pounds 400,000 this time. The shares fell 8p to 25p on the news.
The company said that during the audit of the year-end accounts, the company was made aware of certain accounting errors which led to the management accounts being overstated.
The errors primarily relate to costings used in the contracting and access flooring business where the reported margins were much higher than those actually earned.
Though Richards made profits of pounds 1.4m in 1990, its performance has been patchy since. It has made only negligible profits since 1992.
Recently it has achieved some success in the export market, selling steel supports to the Far East and Pakistan.
Last year the company reported trebled profits of pounds 276,000, helped by improved confidence in the engineering sector and a 32 per cent increase in exports at the engineering business.
The company also said that the proposed landfill tax which was unveiled in he last Budget had led to an increase in inquiries from the foundry industry about its thermal reclamation technology.
It is the second time in three years that shareholders have suffered a dramatic cut in the dividend. In 1993 the company slashed the pay-out from 4.4p to 2.25p, blaming the recession.