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Shares tumble after downturn at contractor's facilities management division Fall in track renewal halves Jarvis profits

Finance

SHARES in Jarvis fell by about 10 per cent last week, wiping £40 million off its stock market value, after the firm unveiled a near- halving in profits.

The fall follows a downturn in the firm's track renewal activity.

Chief executive Paris Moayedi said the firm had been affected by seasonal variations, although the results did not reflect the significant progress made in the group's development.

Jarvis maintained its dividend and Mr Moayedi, who announced plans to retire from the firm at the end of this financial year, said the results, though disappointing, were in line with market expectations.

Pre-tax profits at Jarvis fell to £10.9 million in the half ending October, from £19.7 million in the same period last year, on turnover which advanced by 13 per cent to £314 million. The shortfall in track renewal work was behind a collapse in profits at the firm's facilities management arm to £7.9 million from £19.6 million last time on turnover little changed at £200 million.

The firm said resources had been poorly utilised. It added that measures were in place to convert the RT16 contract it holds with Railtrack into an alliance. The work covers the renewal of plain lines of track in several regions.

Elsewhere, turnover at the traffic management and highway maintenance business lifted by 42 per cent to £85 million, boosted by a full-year contribution from the Streamline acquisition.

Jarvis's capital projects and plant hire business more than doubled profits to £5.2 million from £2.02 million last time on a turnover of £99 million. The firm has almost pulled out of traditionally tendered construction in favour of PFI and similar projects.

Jarvis also expects to benefit from the introduction of flexible rostering and Railtrack's £280 million West Coast Main Line programme.

The road services division is expanding overseas through joint ventures and the capital projects arm has a strong order book.