RATIONALISATION costs have pushed Jones Group, the radiator, shipping and oil distribution company, into the red. Interim results show a pre tax loss of £2.4 million in the six months to June 30th, 1996, contrasting with a profit of £1.49 million in the first half of 1995. No interim dividend is being paid.

Rationalisation costs of £4 million at it troubled Runtalrad raditor business, were only partly offset by a profit of £1.36 million, from the sale of fixed assets. The operating profit before exceptionals fell from £970,000 to £570,000.

Poor results were anticipated. ,The group had warned that a provision of £4 million was being made to cover the costs of rationalisation at the Runtalrad plant in Thomastown, Co Kilkenny. It has now warned that "further difficult decisions remain to be implemented if the long term viability of the operation is to be secured".

Its future is contingent on the full implementation of its programme of change. The future of the steel tube plant in Kilkenny, which supplies Runtalrad will also depend on, the outcome of "the rationalisation talks with the unions.

The chief executive, Mr Pat Nevin said a number of options were being explored but he would not elaborate. The £4 million covers all contingencies so there would be no further exceptional costs in the second half. Mr Nevin stressed the group had no intention of carrying forward any loss makers into next year.

It has already closed its Kellings radiator plant in Birmingham. Its products have been transferred to the Thermal Radiator plant in Portsmouth.

Jones had the benefits from two sales in the first half the sale of the Rathnew, in its shipping division, and the sale of its headquarters, at Beechill in Clonskeagh, Dublin 4. These resulted in a capital profit of £1.36 million. Nevertheless net borrowings rose from £1.65 million to £11.62 million. It is, however, in a relatively strong financial position with a moderate gearing of 44 per cent.

Reviewing the performance of the different divisions, Jones said the sale of the Rathnew resulted in a marginal drop in earnings. Three other ships, the Rathrowan, the Rathkyle and the Rathmoy, operated effectively on their respective charters.

However, the performance of the Rathcarna, which is on the chemical spot market, "was less satisfactory". On a more positive note, the construction of a new ship is on schedule for delivery in May 1997 when a long term charter with a BHP subsidiary, Koppers, will commence. The benefit, said Mr Nevin, would come through in the second half of 1997.

In the group's distribution division, Jones Oil traded ahead of expectations "as a prolonged winter increased demand in Ireland". Jones Oil, according to Mr Nevin, increased its market share. In Britain, Minster Fuels and Hardy Craske (Fuels) had strong volume growth but more intense competition reduced margins. Blugas achieved targeted improvements.

Jones has had a number of senior management changes since August 1995. And yesterday it announced the appointment of, Mr Jim McLoughlin, as finance director, with effect from November 1st. He takes, over from Mr Niall Pelly who resigned last April.

Jones is looking for some improvement in operating profit this year. However, there is no prospect of a meaningful improvement until 1997.