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Kier issues profit warning as building arm takes hit
Kier has today issued a profit warning as the group’s new boss attempts to gets to grips with the debt-laden business.
The giant contractor said it now expects full-year operating profits to be around £25m lower than previously forecast, partly due to lower revenue from its buildings arm.
The news sent the Bedfordshire-based firm’s share price to its lowest point in 19 years. At the time of writing, Kier’s share price had plunged to 166.91, down 40% from 277.62 at the close of trading on Friday.
The firm, which has a net debt of £180m, is also still seeing “volume pressures” in its highways, utilities and housing maintenance businesses, it warned.
Kier said in March that its revenue had been hit by lower spending by housing associations and councils on property maintenance work.
The group has endured a tumultuous time of late, as a rights issue last year flopped, leading to the exit of its long-serving chief executive Haydn Mursell. Finance boss Bev Dew is also leaving after a four-year stint.
Andrew Davies, who was due to take the top job at Carillion before its collapse, joined Kier as chief executive in April and is overseeing a strategic review.
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The group was already in the midst of an overhaul, branded ‘Future Proofing Kier’. Today, Kier said the cost from this will now be around £15m higher than first thought.
“In part, this reflects an acceleration of the programme following the appointment of Andrew Davies as chief executive,” Kier said.
The extra costs from the overhaul are on top of the expected £25m drop in operating profits.
Mr Davies will unveil details of his strategic review on 30 July. Full-year results are expected to be published on 19 September.
