Kier launches business streamlining plan

Aaron Morby 6 days ago
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Kier is launching a big cost-saving programme that will see non-core businesses offloaded to reduce debt.

Mursell says Kier is focused on improving its performance and reducing net debt

Details of the Future Proofing Kier programme will be set out when final year-end results are reported in September.

The efficiency and streamlining plan was unveiled as chief executive Haydn Mursell revealed that average month-end net debt had risen to £375m from £350m six months ago and £300m more than a year ago.

In a trading statement covering the 12 months to June 30, he said the rise in net debt reflected reduced volumes due to bad weather affecting the construction business over the winter.

This saw building turnover fall to below £100m a month before returning to normal levels of around £175m.

“Construction volumes have since returned to levels in line with management’s expectations,” he added.

Mursell said Kier was focused on continuing to improve its performance and reducing its average net debt. This is forecast to fall sharply in the 2019 financial year and in 2020.

During the last two years Kier has invested in new digital management systems and will now use the tools to streamline processes and restructure operational layers of the business going forward.

“This programme will improve productivity, include the disposal of non-core operations and deliver an improvement in operating margins and cash generation.

“It is anticipated that material benefits will be realised in the financial year ending 30 June 2020 and beyond,” he added.

Kier has also just changed its reporting structure going forward combining property and housing to report alongside the Infrastructure Services and Buildings divisions from July this year.

Mursell said that Kier’s underlying profit and earnings forecast would be in line with expectations.

Kier’s construction and services order books rose to more than £10bn, providing a 90% secured revenue position for next year.

In the highways sector, the contractor has just secured three-year extensions to Highways England contracts for Areas 3 and 9, with  total yearly revenues of £250m.

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