Kier in £40m profit warning
Kier has issued a £40m profit warning, as increased costs associated with its Future Proofing Kier (FPK) programme and a tough trading environment for several of its businesses hit its bottom line.
In an update to the City this morning, Kier said it was experiencing “volume pressures” within its highways, utilities and housing maintenance arms, while the buildings business would also see a lower revenue than previously forecast in 2018, despite double-digit growth in its orderbook.
The company warned that revenue in 2019 was likely to be flat as compared to its 2018 figure of £4.3bn, while its underlying operating profit its now expected to be £25 million lower than previous expectations.
The news means that Kier will end its financial year with more net debt than it had originally forecast.
Meanwhile, the costs of the FPK programme are now expected to be £15m higher than previously forecast. Kier said this was in part due to an acceleration of the programme following the appointment of Andrew Davies as chief executive.
Davies is leading 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 leverage.” The conclusions of the review will be announced on 30 July 2019.