Eddie Stobart owner's shares slump
The owner of the Eddie Stobart haulage business delivered a jolt to investors after it reduced its expectations for full-year profits.
Heavy load: Concern by VAT increase and Government's spending review
Stobart Group blamed the 'slight' downward revision on the impact of Network Rail spending cuts at its rail infrastructure maintenance operation.
It also reported shorter lead times and volatility in volumes at its core transport business and said it was concerned that business may be affected by January's VAT increase and the government's spending review.
Stobart's shares, which have been on an upward path in recent weeks, slumped 9% to 142.3p in the FTSE 250 by 11.30.
The fall came despite the company reporting a better-than-expected 24% rise in half-year profits from continuing operations to £15.4m in the six months to August 31. Revenues were up 11.7% to £243.7m.
It said the Eddie Stobart business - the largest of its divisions with a fleet of 1,850 trucks and 3,000 trailers - performed particularly well after contract wins with Tesco and Tizer drinks firm AG Barr among others. Revenues for the division jumped to £219m from £188.7m a year earlier.
Stobart, which has operations covering road, rail, ports and air, has weathered the economic storm because a large slice of its workload involves food and drink, where business volumes have been resilient.
Analysts also believe its pay-as-you-go business model has enabled the Carlisle-based business to retain existing customers.
The company's rail division, which runs freight services and undertakes work such as bridge and line-side maintenance, saw half-year revenues drop to £26.3m from £30m a year earlier.
The group added: 'Work on rail infrastructure has been depressed due to cutbacks in expenditure by Network Rail and other major clients with cost savings and constraints imposed by the Office of Rail Regulator.'
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