Prism Rail profits and shares plunge

SHARES IN Prism Rail, which operates four passenger train franchises, plunged by 14 per cent yesterday after the group reported a 90 per cent fall in first-half profits and warned that earnings for the full year would be below expectations.

The group blamed a sharp reduction in the public subsidies it will receive this year, higher penalty payments owing to poor performance and a shortage of drivers.

Prism operates London-Tilbury-Southend Rail - once dubbed the "misery line" - West Anglia Great Northern, which runs trains out of London's Liverpool Street station, Wales and West Country, and Cardiff Railway. Revenue grants for the four franchises are falling by pounds 30m this year.

Pre-tax profits for the period from 1 April to 17 October collapsed from pounds 4.2m to pounds 500,000 after subsidies fell by pounds 14.4m. Prism made a net payment of pounds 2m under the performance regime. Analysts cut full-year forecasts from pounds 13m to pounds 10m.

The main problems occurred in Prism's Wales and West Country franchises, which were hit by driver shortages, poor reliability, an increase in track failures and the poor summer.

Giles Fearnley, chief executive, criticised Railtrack, saying that its performance in Wales and West Country had been "far from satisfactory".