Tunnel collapse pushes Laing unit into red

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The Independent Online

Shares in the construction company John Laing suffered their biggest one-day fall in almost five years yesterday after the group revealed its railway business had plummeted into the red during the first half of the year and was likely to make even greater losses over the coming months.

The poor result was driven by a loss of customers on the company's Chiltern Railways line following the collapse of a tunnel in Gerrards Cross, and the subsequent closure of the route for seven weeks last summer.

The tunnel collapsed due to construction work on a new Tesco supermarket overhead. The disruption to the service forced travellers to seek out other routes. However, once the route was reopened many of the passengers failed to return.

Laing is in discussions with Tesco over a settlement. "On the assumption that no further compensation has been received by the year-end, we would expect the second-half losses to exceed those of the first half due to the declining subsidy profile and cost pressures," the construction company said.

Pre-tax profits for the Laing group as a whole were down more than 10 per cent to £12.3m for the first half - a result which was boosted by the one-off disposals of several PFI operations.

In spite of the losses in its railways division, and rising costs across the business, the group said it was optimistic about prospects for the company over the coming year.

"The UK infrastructure market continues to present significant opportunities and we believe there is also significant potential for John Laing to target and have continued success in overseas markets," said Bill Forrester, Laing's chairman.

Shares in the company fell almost 9 per cent to 265p, giving it a market value of about £620m.