Building giant’s shares tumble
Kier profit warning as stock falls 40%
CONSTRUCTION giant Kier is in a “dark place” after revealing a £40million profit warning, experts warned.
The firm’s share price crashed more than 40% to a 20-year low yesterday following another gloomy update.
Kier employs 21,000 people and has about 400 projects on the go at any one time, including the delayed Crossrail and HS2.
But a big headache is spending cutbacks.
Kier has lots of public sector contracts, including with Highways England, where the firm maintains over 30,000 miles of big roads and 200,000 miles of small ones. It’s also seen workloads drop in social housing maintenance and slower growth in building schools and hospitals. Weaker trading will knock £25m off annual profits, with another £15m hit from speeded-up costcutting, with the benefit felt later.
Kier now expects to make £129m profit in the year to the end of June, down from analysts’ forecasts of £169m, and the £160m it made last year.
The firm is also set to end its financial year with a predicted £60m of debt, when it aimed to have cleared it by now. All eyes will be on a shake-up which new chief Andrew Davies – who took over in April – will announce at the end of July. Broker Peel Hunt reckons the share slump “may herald a turning point”. But John Moore, senior investment manager at Brewin Dolphin, said: “Kier is in a dark place.
“At the turn of the year it set out its financials, trading performance, and plans as part of its unsuccessful rights issue, only to now say this information was largely wrong.”
Kier is among several firms under pressure since the demise of rival Carillion.
Davies was due to take charge of Carillion before it went to the wall in January last year.