Stadium delays hammer Laing profits

Click to follow
The Independent Online
JOHN LAING, the civil engineering group, yesterday revealed that this year's profits will be hit by a pounds 26m provision after cost overruns on several contracts, including the pounds 120m project to build the Millennium Stadium in Cardiff for the Welsh Rugby Union.

A further pounds 7m provision will be made to cover the costs of restructuring the group's construction activities, the company said in a statement to the stock exchange. The company blamed "significant design developments to accommodate departures from the original design concept" for the delays in the stadium project.

However, John Laing insisted that a decision to ease noise restrictions to allow 24-hour working on the stadium should enable the inaugural match between Wales and South Africa to go ahead on 26 June.

News of the provisions sent John Laing shares down 36p to an 18-month low of 303p as it became clear that the company is likely to report a loss for the current year to 31 December. Last year the entire group reported a profit of pounds 32m in the full year. Two months ago it announced profits of pounds 18m for the six months to the end of June.

Employees were told yesterday that the group's UK construction activities, building, management contracting and civil engineering will be consolidated into a new division, Laing Ltd. No details were released but the pounds 7m provision will cover redundancies among senior management and other staff as the group attempts to eliminate construction losses.

The statement indicated that in future the division will be more selective in accepting contracts and partners in an attempt to reduce risk and improve returns. The statement says: "All the group's other divisions are performing well and the Board expects [their] targets will be met or bettered."