Jim Armstrong, chairman of Laing鈥檚 construction arm, has said the group will consider taking part in industry consolidation once the division returns to the black.
Armstrong said a merger or acquisition could be on the cards for Laing in the future. However, he added that the construction arm, which lost 拢19m in the first half of 2000, is not expected to make a significant profit before 2002/03.
Referring to the recent wave of deals, he said: 鈥淭here is no doubt that Lend Lease has been good for Bovis, and Skanska will be good for Kvaerner.
鈥淟aing鈥檚 first priority is to fix what we have, then we will look at how best to position ourselves, whether it be through mergers or acquisitions. Laing will be looking to take part in the changes within the sector.鈥� Armstrong is critical of the sector鈥檚 performance in the past decade. He said: 鈥淧rofitability of contractors over the past 10 years has been pretty lousy. We need to improve the service, the value we offer and the margins we get.鈥�
As well as the loss in construction, Laing plans to spend 拢15m this year reorganising the division. The spend will include redundancy costs and an overhaul of the group鈥檚 local offices.
Armstrong said the reorganisation would be complete by the end of the year. He said: 鈥淲e are not shirking away from making changes.鈥�
He said the group鈥檚 exit from competitive tendering work last year was already taking effect, with fee-based and two-stage tender work giving higher margins. Armstrong added that Laing was also looking to increase its construction management work with the launch of a new worldwide division called Laing Project Services.
This division will focus on design management and cost planning. Headed by managing director Brian Emerton, formerly managing director of John Laing International, the arm will have about 100 staff
Despite the losses in the construction division, Laing Group increased its interim pre-tax profit by 70% to 拢27.5m. This was because of strong performances in the homes and investment divisions. Turnover rose 4% to 拢804m in the half year.
Laing Homes nearly trebled its pre-tax profit to 拢28.2m and the group said sales were on target to produce a record result for the year.
Pre-tax profit in the investment arm rose 73% to 拢13.2m. The group said the arm was working on closing three major private finance initiative schemes, two for the Metropolitan Police and a hospital for east London鈥檚 Newham NHS Trust.
