Kier slashing jobs as group overhaul plans gain speed

● Construction firm with many Scottish contracts seeks £55m cost savings a year

Construction firm Kier Group, which is behind a string of Scottish projects, is progressing with plans to cut 1,200 jobs as part of its plans to simplify the business and save on costs.

The company said yesterday that it had completed a strategic review under new chief executive Andrew Davies that identified ways to generate cash and reduce its debts.

The job losses are the result of the Future Proofing Kier programme, which has been accelerated so that 650 fulltime employees will have left by the end of this month.

Another 550 are expected to go by the end of the 2020 fiscal year.

The move is expected to create £55 million of annual cost savings from the 2021 financial year onwards.

However, this is after a £28m annual cost for the restructuring in both this year and next.

Davies said: “These actions are focused on resetting the operational structure of Kier, simplifying the portfolio, and emphasising cash-generation in order to structurally reduce debt. By making these changes, we will reinforce the foundations from which our core activities can flourish in the future, to the benefit of all of our stakeholders.”

Kier also concluded that its portfolio is “too diverse” and it will focus on regional building, infrastructure, utilities, and highways.

As part of the renewed strategic focus, Kier will sell off housebuilding business Kier Living, its property-development arm and its facilitiesmanagement and environmental services. The company said it had already received a number of expressions of interest for Kier Living.

It comes just weeks after the firm issued a shock profit warning, with bosses revealing that earnings were expected to be £25m lower than expected.

The group said in the trading update published 3 June that the highways, utilities, housing maintenance and buildings divisions would be particularly affected and revenues would be flat at around £2.5 billion. At the time, Davies revealed the costs to its futureproofing project would more than double – costing £29m compared with £14m originally earmarked.

The company’s troubles have made for a busy start to the job for the new boss, who only took up the role in April.

He had previously been due to take on the top job at failed outsourcer Carillion, but the group went bust before he could begin.

In terms of projects north of the Border, Kier Construction Scotland earlier this year completed the multi-millionpound overhaul of two historic buildings for the University of Edinburgh.

Kier Regional Building Scotland has been signed up to help deliver the £22m revamp of Paisley Town Hall, in what it has described as a “significant” heritage contract win.

Additionally, the group was chosen to develop an elective care facility at the Golden Jubilee National Hospital in Clydebank.