Kier slumps to £245m loss as restructuring charges bite

Kier Group, the building contractor behind a string of major Scottish projects, has swung to a £245 million pre-tax loss after extensive restructure charges dragged on earnings.

Kiers restructure will lead to around 1,200 jobs being axed by the end of the current financial year. Picture: Mike Abrahams

The firm admitted the losses for the year to 30 June were “disappointing”, in stark contrast with pre-tax profits of £106m the previous year.

Kier’s bottom line took a £341m knock from charges related largely to its restructure, which will lead to around 1,200 jobs being axed by the end of the current financial year. This includes 650 which were already cut over the summer.

The restructure, dubbed the Future Proofing Kier programme, is forecast to save £55m annually from the 2021 financial year. Kier also reported a £50m hit from loss-making contracts.

Full-year revenues came in at £4.1 billion, a dip from £4.2bn in the previous year.

The group’s Scottish arm pointed to the heritage, education and healthcare sectors as key areas of growth, with current projects including the £21.5m redevelopment of Glasgow’s Citizens Theatre and the £66m refurbishment of the Burrell Collection.

Kier Regional Building Scotland is also behind the new £32m Alness Academy for Hub North Scotland and is delivering the first phase of a £50m expansion at the NHS Golden Jubilee National Hospital in Clydebank.

The group also revealed it has begun the search for a new chairman to replace Philip Cox, who has announced plan to retire after two years in the role. Cox will remain in post until a successor has been appointed.

His announcement comes just five months after chief executive Andrew Davies took the reins at the group, which has been in recovery mode since last year’s emergency cash call to raise £250m, followed by an accounting error that pushed it into debt by another £40m.

Davies said: “Kier experienced a difficult year, resulting in a disappointing financial performance.

“However we are building firm foundations for the future. We have a new management team in place, we have defined our strategic priorities, and we are taking decisive actions to deliver them.

“The re-shaping of the group is designed to reduce its overall indebtedness during full-year 2020 and to restore Kier to robust financial health.”

Howard Seymour, analyst at Numis, said the results were “inevitably convoluted, but are a first step on the road to recovery”.

Kier has suspended its shareholder dividend payout and launched the sale of its housebuilding division.

It said the sale of Kier Living was “progressing well” and it is also looking at ways to accelerate the release of capital from its property business.