City analysts had been expecting sales to remain flat for Kier this year but in a trading update today the company said: "Trading in the group's Infrastructure Services and Buildings divisions has remained resilient. However, the group's turnover for the 2019 financial year is anticipated to be approximately £100m lower than for the 2018 financial year, principally as a result of property and land-led transactions which did not complete in June 2019, which will have an impact on the group's profitability broadly in line with its historic gross margins.
While the impact on profits will not be on the scale of the £25m hit on underlying operating profit for the year that Kier revealed in June, it still could have threatened to feed negative sentiment for a company that has seen its share price fall from more than £10 a share last September to below 60 pence earlier this week. However, Kier's share price jumped 33% on the back of today's trading update, buoyed by news of debt reduction and new CFO.
Also revealed was that the sale of Kier Living, its housebuilding division, announced in June, has now started.
And the average number of days that Kier takes to pay suppliers has come down from 57 days in the first half of the financial year (Jul-Dec 2018) to 41 for the second half (Jan-Jun 2019).
Average month-end net debt for the 2019 financial year was £422m, at the lower end of previous guidance of £420-450 million.
Later this month sees the arrival of Simon Kesterton as chief financial officer to replace Bev Drew. Mr Kesterton joins the board of directors as CFO-designate on 26th August 2019 and will assume the role of CFO on 19th September after the annual results have been filed. Bev Dew will then go on garden leave for the remainder of his notice period, which runs to May 2020.
Mr Kesterton appears to have little or no experience of construction but is said to be good at trimming fat. Since 2013 he has been group finance director of RPC Group, a plastic packaging supplier. Before that, he was CFO Europe and also chief strategic officer at International Automotive Components (IAC) Group, where he worked from 2006 to 2012.
Kier chief executive Andrew Davies said: "Simon has a broad range of finance experience across a number of sectors. In particular, he has played a key role in implementing programmes which focus on the disposal of non-core assets, the reduction of overheads and cost control. I would like to welcome Simon to Kier and I look forward to working with him."
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