John Laing profit slumps amid challenges in renewable energy market

John Laing was under the cosh on Thursday as it posted a slump in half-year profit and highlighted challenges in the renewable energy market.

In the six months to the end of June, net asset value rose 0.6% to 325p a share, but pre-tax profit at the infrastructure investor dropped to £35m from £175m in the first half of 2018. The company reported £66m of writedowns on renewable energy assets in Australia due to industry transmission problems and £55m of writedowns on its European wind assets.

It also noted that 2018 profit benefited from a one-off disposal gain of £87m.

Chief executive officer Olivier Brousse said that while the operational performance in the first half was "strong", challenges with its renewable energy assets in Australia and Europe took their toll.

"We delivered value enhancements across the portfolio, but predominantly in renewable energy, which has helped to mitigate the impact of these challenges," he said.

"We remain confident in delivering our full year expectations, underpinned by the value inherent in our existing portfolio and further penetration of our targeted markets."

At 1030 BST, the shares were down 8.4% at 349p.

RBC Capital Markets analyst Alexander Wheeler: "The writedown of the renewable assets is unhelpful, however we note that JLG is showing a conservative approach to these assets, with the issue in Australia industry wide.

"Furthermore, the decision to suspend further investment in these areas is sensible given strong opportunity in PPP assets in other geographies. Strong value-enhancement gains in PPP assets is a positive, with significant assets such as IEP phase 2 reaching operation and is arguably a more important component of the overall business long term."