Laing is bright spot in building

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The Independent Online
SHARES in John Laing rose 11p to 120p yesterday as it became one of the few builders to report neither a provision nor a large profit fall in its interim results statement, writes Rupert Bruce.

Ordinary and A shares rose by the same amount, as Laing reported interim pre-tax profits down from pounds 6.3m to pounds 5.6m for the half-year to 30 June.

The builder's strong financial position was underlined by net cash of pounds 10m at the half-year stage, compared with net debt of pounds 13.2m at the same time last year.

But Martin Laing, chairman, does not see a recovery for builders in 1993. 'In common with the rest of the construction and manufacturing industries we regret that the Government's dogmatic insistence on non-intervention in the economy and its rejection of any positive proposals by industry will only exacerbate the current recession,' he said.

Turnover fell to pounds 596.6m from pounds 810.5m, reflecting the downturn in construction. Work in hand is down 25 per cent on June 1991 and margins on new work are lower.

UK house sales were up to 635 from 600. But Mr Laing said the pick-up in confidence that followed the general election had not been sustained. The increase reflects rising sales to housing associations.

In the US, the group sold 157 homes compared with 129. But margins have been forced lower.

Earnings per share were 4.5p, down from 4.8p last year. The interim dividend has been maintained at 3p.

The group has continued to cut costs and has reduced its workforce by more than 3,200, or 26 per cent, since 1990.

Analysts said the company had not needed to make any land write-downs this time because it took a pounds 12m hit in 1990.

The average value of the UK housing land plots is pounds 15,900, or 25 per cent of the selling price. But that figure masks a higher price in the South-east and a considerably lower one in Scotland.

The group is running down its housing land bank so it has only two years of stock compared with about three previously.

John Laing Construction has a number of contracts in hand. They include: the second Severn crossing, the Royal Lancaster Infirmary phase 3, and the HCI hospital contract in Glasgow.