A rough ride ahead as York-based rail firm Jarvis aims to keep business on track (From York Press)

A rough ride ahead as York-based rail firm Jarvis aims to keep business on track

8:49am Wednesday 12th August 2009 in

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BUSINESS will be tough for York-based Jarvis Plc for the rest of 2009, when more jobs will be lost, but prospects beyond this year look promising.

That is the essence of the group’s interim management statement covering the period from April 1.

A restructuring programme announced in March involving the loss of 450 Jarvis jobs nationally – about 50 of them at York HQ and depots – was progressing well, but since then, as work volumes diminished for this year, another £3 million in savings had to be found.

A Jarvis spokeswoman said today that inevitably this will mean further job losses. She was unable to predict numbers, but said: “Job losses are not expected to be significant in the York area.”

The group’s strategy – to concentrate on its rail, plant and freight business, while improving profit margins for its facilities management business – “remains on track”, according to the management statement.

A small operating loss during the first quarter was in line with management expectations.

Also expected was the effect of the Government’s decision to delay major rail works, with the group’s volumes dropping in the first quarter, with an impact also felt on its plant business.

The good news is that freight is performing well and Jarvis has secured a 32 month extension to its coal haulage contract with E.ON UK.

While unaudited net debt at the end of June stood at £20.2 million, Jarvis was able to extend its banking facilities for a further year to January 2011.

Steven Norris, chairman of Jarvis Plc and a former Transport Minister, said: “Volumes are expected to continue at the anticipated lower levels throughout the current financial year.

“Tender activity should start to pick up in the second half, although short-term visibility remains poor. Beyond this year, prospects remain more promising.”

Network Rail had a capital works programme funded to 2014 and the government had announced a £1.1 billion project to electrify two major rail lines.

He said: “These are significant opportunities for a contractor with our level of expertise and we will be working hard to ensure we maximise the benefits these present.”

Meanwhile, Stuart Laird, Jarvis’ chief operating officer will be appointed chief executive, succeeding Richard Entwistle when he retires at the group’s annual meeting on September 3.