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City optimistic on Jarvis profits

CITY ANALYSTS expect Jarvis to report an £18M increase in pretax profits for its financial year to the end of March, even though it issued a profit warning last week.

But they fear long term profitability could weaken as Railtrack seeks better value for money from its contractors.

Jarvis blamed a ten month overtime dispute with the Rail, Maritime & Transport Workers' Union for slashing forecast pretax profits for the year to 31 March from an expected £62M to £55M.

Shares in the construction, maintenance and facilities management company fell 15.7% after the announcement. However, Jarvis chief executive Paris Moayedi dismissed the warning as a stock-market formality.

With nearly 50% of Jarvis' work in the rail sector, analysts fear Jarvis profits could be hit more seriously in the long run now that Railtrack is demanding better value for money (NCE last week).

One analyst said Jarvis' margins could be squeezed down from around 10% to 5% and said Jarvis 'will have to focus on trying to get a better spread of business to limit damage'.

(See Analysis page 12)

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