In a trading statement today Kier said that underlying operating profit for the year to 30th June 2019 will by £25m less than it had previously expected and the cost of fixing the company’s problems will be £15m higher than previously estimated.
Kier's share price fell 40% on the news, from 277p to 160p. Six months ago Kier was worth £9 a share.
As previously reported, Kier made an operating loss of £21m in the first half (the six months to 31st December 2018).
Restructuring and cost-cutting is being carried out under the name Future Proofing Kier, or FPK, which was launched in September 2018. The additional costs associated with FPK are partly down to new chief executive Andrew Davies, who joined just seven weeks ago, wanting to accelerate the programme.
In the trading update Kier said that it was continuing to experience ‘volume pressures’ within its highways, utilities and housing maintenance businesses. And revenue growth in the buildings business was lower than previously forecast.
Revenue for the current financial year is now expected to be about the same as in fiscal 2018 – which was £4.28bn.
On 15th April 2019, Kier announced that Andrew Davies would lead a strategic review of the group to consider ways of further simplifying it, the allocation of capital resources across the group and additional steps to improve cash generation and reduce borrowings. The conclusions of this review will be announced on 30th July 2019. At the same time, Kier will provide a further update on the FPK programme.