Jarvis has issued a profit warning and said it plans to cut costs after a drop in work from Network Rail

The rail specialist announced that a deal with its sole client had been struck in order to deliver the lower levels of work.

It said operating margins in 2009/10 were likely to be “adversely impacted”. Steven Norris, executive chairman, said: “The company has performed strongly this year as the strategic initiatives of the past three years have taken effect. The board is therefore naturally disappointed that Network Rail has decided to adjust the phasing of its five-year track renewals programme.”

Jarvis said it was confident about long-term rail opportunities as £4bn is to be invested in track renewals over the next five years.