Shares in Stobart dived on the FTSE 250 in morning trading after the logistics company reduced its full year profit forecast due to concerns about government cuts.
In its results for the six months to 31 August Stobart reported a rise in revenue of 11.7 per cent to £243.7 million, while pre-tax profit increased 38.7 per cent to £15.4 million.
The group said it would be holding its interim dividend at 2.0 pence per share, while net cash was reported as falling from £19.7 million at the end of the same period last year to £13.6 million.
During the half year period the group's trucking business, Eddie Stobart, signed a £25 million per annum deal with Tesco for the distribution of chilled goods, as well as a seven million pound deal with A G Barr and an 18 million euro deal with Tesco Ballymun in Ireland.
Despite this the group's CEO, Andrew Tinkler, said that profit forecasts were being lowered due to lower spending by the government.
Mr Tinkler said, "We have again shown strong growth and resilience in the business with underlying profits up 24%. Eddie Stobart has performed particularly well after contract wins with Tesco, A G Barr and others which have added volume and margin and there is further growth to come from these contracts. Changes in the way our customers operate have provided challenges to us which we are addressing. In particular we have faced shorter lead times and volatility in volumes. In the long term we are well placed to take advantage of these changes in the market.
"Exciting developments include the biomass link-up with A. W. Jenkinson Forest Products, the major improvements at London Southend Airport and agreement with Aer Arann. We are talking to other significant potential customers in both of these businesses.
"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. However, in the long term we see this as positive for the economy and our business. Overall, we look forward to further growth in the second half as new contracts fully contribute. Our efficient green fleets and innovative transport solutions continue to impress customers and our improved assets give excellent opportunities for adding value."
By 11:00 shares in Stobart were down 8.75 per cent on the FTSE 250 to 142.80 pence per share.