Jarvis shares tumble after profit warning
SHARES in troubled rail and plant firm Jarvis plunged more than 14 per cent after it today issued a profit warning to round off a “disappointing year”.
The FTSE Fledgling company spooked investors with forecasts of a £5m operating loss this year following a “very considerable reduction” in the volume of rail and plant work available. A further £3m in restructuring costs will hit full-year figures further.
Jarvis has been feeling the pinch since Network Rail – whose contracts are a major source of revenue for the group – scaled back track renewal investment by 30 per cent in the current tough economic climate.
However, chairman Steven Norris says its efforts to reduce its dependency on Network Rail contracts are paying off with recent new contracts wins helping to turn around the company’s fortunes.
Last month Jarvis secured a £55 million Evergreen 3 deal from Chiltern Railways for renewal works to the line serving Oxfordshire and the Midlands. It also recently won a small signalling deal from London Underground.
“The Evergreen contract is a huge boost and we now have a strong bid pipeline with a significant proportion of work secured already for next year,” Norris said.
In November the group, which came close to collapse in 2004, reported half-year losses of £5.9m with revenues tumbling to £115m.