Better times are ahead for Jarvis despite it announcing a £3.6 million loss and a drop in turnover by nearly 50 per cent.

That is the view of Steven Norris, chairman of the York-based rail maintenance and freight group as it reported half-year losses.

Even though its interim 2008 profit of £4.4 million has now turned into a £3.6 million loss, with turnover nearly halving from £203.1 million to £114.7 million, the company is still viewing the results as “slightly ahead of management expectations”.

The figures include exceptional items of £2.3 million partly due to the restructuring announced in June and costs of 450 jobs lost nationally, about 50 of them at York HQ at Meridian House in The Crescent and city depots.

Jarvis’ problems reflect a Government decision to delay major rail works. As volumes dropped, Jarvis was able to extend its banking facilities until January 2011 at the same time as securing a 32-month extension to its coal haulage contract with E.ON UK.

Jarvis was also successful in its bid to become one of Network Rail’s preferred multi-asset enhancement contractors, with commissions on major projects in Stoke, Scotland and London.

Due to the delay in new projects, Jarvis is anticipating it will break even at an operating level by the end of its financial year, but while Network Rail has delayed its spend, it still has a programme funded to 2014.

Mr Norris pointed out he predicted this year’s difficult conditions, “but due to the hard work and determination of everyone involved we are able to report a first half performance slightly ahead of expectations”.

He said: “It has not been without its pain.

“We have undergone a huge restructuring programme which I am pleased to say is now largely completed and I thank all our colleagues in the business at every level for their support throughout this time.

“We have placed particular emphasis on improving our business development capabilities and developing relationships with new customers.

“We are now beginning to see the fruits of that exercise both with Network Rail and other customers and we are confident that this will prove successful in the award of new contracts in the near future.”

A key objective of the business, he said, was to reduce Jarvis’ dependency on Network Rail.

It was “an important way of ensuring we deliver future volume improvements and a healthier business as a result”, he said.