Rail and VAT prompt Stobart to lower forecast

20th Oct 2010 07:51

Logistics group Stobart has cut its profit expectations for this year to the bottom of the market's range and is wary over prospects for 2011."We have slightly reduced our full year profit expectations as a result of reduced spend by Network Rail and increased overall finance costs. We are also cautious that 2011 may see volumes affected by the increase in VAT rate and the government spending review," said Andrew Tinkler, chief executive.Profits in the half year to August rose by 39% to £15.4m (2009: £11.1m) on sales of £244m, up from £218m. Underlying profits rose by 24% helped by new contracts with AG Barr and Tesco.But problems with its rail business will offset some of these gains this year added chairman Rodney Baker-Bates."We also have strong opportunities to develop new customer relationships and contracts especially in the biomass business and Stobart Air division but profitability in Stobart Rail will continue to be affected by factors to some extent outside of our control," he said. "The board looks forward to reporting on further progress, including a good second half, giving a result for the year as a whole that will be towards the bottom end of our current expectations," he added.The interim dividend is held at 2p.