Kier swings to £245m loss in ‘difficult’ year
Under-pressure government contractor Kier has revealed the impact of a “difficult” year as it swung to a £245 million loss, but put faith in turnaround plans to revive its fortunes.
Shares in the group fell 5% as it admitted the results were “disappointing”, with the losses for the year to June 30 comparing with pre-tax profits of £106 million the previous year.
The firm – which has contracts with Crossrail and Highways England among others – saw its bottom line hit by £341 million of charges, related largely to its restructure, which is seeing 1,200 jobs axed by the end of next summer.
Revenues fell 2.8% to £4.1 million.
Analysts at Liberum said the results were “grubby”, but added they believed the business “can survive”.
Kier also revealed alongside results that it has begun the search for a new chairman to replace Philip Cox, who announced plans to retire after two years in the role.
He will remain in post until a successor has been appointed.
It comes just five months after chief executive Andrew Davies took on the role.
Mr Davies said: “Kier experienced a difficult year, resulting in a disappointing financial performance.
“However we are building firm foundations for the future. We have a new management team in place, we have defined our strategic priorities, and we are taking decisive actions to deliver them.”
He added: “The re-shaping of the group is designed to reduce its overall indebtedness during full-year 2020 and to restore Kier to robust financial health.”
Kier has been in recovery mode since last year’s emergency cash call in December to raise £250 million, followed by an accounting error that pushed it into debt by another £40 million and profit warnings.
Former boss Haydn Mursell also resigned in January after pressure from some of Kier’s biggest shareholders.
Under the overhaul led by new boss Mr Davies, Kier revealed in June it plans to slash 1,200 jobs by the end of 2019-20, with 650 already cut over the summer.
The plan – dubbed the Future Proofing Kier programme – is expected to create £55 million of annual cost savings from the 2021 financial year onwards.
However, this is after a £28 million annual cost for the restructuring in both this year and next.
The group has also suspended its shareholder dividend payout and launched the sale of its housebuilding division.
It said the sale of Kier Living was “progressing well” and it is also looking at ways to accelerate the release of capital from its property business.