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Kier shares tumble 30% after profit warning

The construction and services group Kier has issued a profit warning, sending its shares falling by more than 30% to their lowest level in 19 years.

Article originally published by The Guardian. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

The construction and services group Kier has issued a profit warning, sending its shares falling by more than 30% to their lowest level in 19 years.

The new guidance means that Kier’s underlying full-year profits will be substantially below earlier forecasts, at about £129m rather than £169m. The shares plummeted by 35% to 179p.

This is less than half the 409p a share investors paid in December, when Kier launched a £264m fundraising in an attempt to avoid the same fate as Carillion, the construction and services company that slumped into insolvency in January 2018.

Kier investors shunned the cash call, with just 38% of the shares taken up, and financial institutions had to step in.

The group, which works on large infrastructure projects such as HS2 and London’s beleaguered Crossrail, is also the UK’s leading regional builder of schools and hospitals. It said revenue growth at its regional buildings business would be lower than forecast.

Kier Group plc

Sell: 48.04 | Buy: 48.50 positive 0.24 (0.50%)
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Prices delayed by at least 15 minutes.

In March, it flagged up problems in its highways, utilities and housing maintenance divisions, and these continue. It has been hit by Highways England cutting back maintenance spending, and delays in telecoms companies’ fibre rollout.

As a result, the company said underlying operating profit for the year to 30 June would be £25m lower than City forecasts of £169m.

In addition, Kier is taking a £15m hit from higher restructuring costs this year. The company’s chief executive, Andrew Davies, who joined from Wates in March and had been lined up to take over at Carillion before it collapsed, is ramping up a programme to streamline Kier.

The group will announce the outcome of a strategic review on 30 July, with speculation about the sale of its maintenance work division.

Analysts at Numis said: “In a situation where Kier has already suffered weak share price and negative sentiment, the need to outline and commence meaningful actions of the strategic review will be crucial to re-winning investor and industry confidence.”


This article was written by Julia Kollewe from The Guardian and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Article originally published by The Guardian. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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