Construction giant Kier warns on profits
Embattled construction firm Kier has issued a shock profit warning, with bosses revealing profits are expected to be £25 million lower than expected.
The company said the highways, utilities, housing maintenance and buildings divisions will be particularly affected and revenues will be flat at around £2.5 billion.
New chief executive Andrew Davies, who is conducting a review into the business, also revealed the costs to its “future proofing” project will more than double – costing £29 million compared with £14 million originally earmarked.
Bosses at Kier, which is a major contractor for the HS2 railway project, said the extra costs are due to an “acceleration of the programme” under the new chief.
Mr Davies joined Kier in March and set to work drawing up plans for a major turnaround, after attempts by previous management to raise £250 million from shareholders to cut debt and strengthen the balance sheet failed.
The review is expected to be completed by the end of July and had originally said the net savings from the plans would be around £20 million by 2020.
Mr Davies was due to take on the top job at failed outsourcer Carillion, but the group went bust before he could take up the role.
The conclusion of his Kier review will be announced in July.
Kier – which is working on the new HS2 railway line – saw shares rise more than 3% to 359.7p after the announcement.
Prior to the ill-fated Carillion appointment, Mr Davies was formerly chief executive of property and construction company Wates Group.
He also previously spent more than 28 years at BAE Systems, latterly as managing director of the maritime division.
The struggling highways, utilities and housing maintenance businesses include laying internet cables for Virgin Media, working with Scottish Water and roadworks on motorways across the country.