Kier starts construction arm cost-cutting review

Aaron Morby 10 years ago
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Kier has put its construction operations under review in a bid to cut costs in the face of falling UK orders.

The moves come hot on the heels of sweeping cost-saving measures at rivals Balfour Beatty and Morgan Sindall who have closed down offices and laid off hundreds of staff in the face of the deepening UK construction downturn.

In a trading statement this morning Kier said: “We are experiencing a good level of bidding activity across the group, however today’s trading environment remains difficult with little sign of improvement in the UK construction market.

“In light of this we are conducting a further review of our construction operations to ensure we remain as efficient as possible.”

Despite looming measures to rescale, Kier said its construction arm had managed to secure £400m worth of orders since July.

The firm’s order book of secured and probable work now stands at £2.1bn, representing 98% of forecast construction revenue for the year to June 2013 and half of work forecast for the year to 30 June 2014.

But Kier warned that the working capital environment in construction would continue to remain challenging.

Kier said it remained focused on the development of mixed-tenure affordable homes and boasted a £300m pipeline of work.

This includes a £20m order from Birmingham City Council for 100 new homes, 235 new homes in Sandwell (£31m), 64 homes in Lydney, Gloucestershire (£8m) and a mixed-tenure scheme of 100 homes in Sheffield through the HCA panel (£11m).

Its private housing business remains on track to deliver in excess of 500 completions this year.

The services division traded in line with expectations and secured £200m of new work so far this financial year, underpinning its £2.1bn order book.

It has secured major local authority maintenance contracts for Hampshire (£19m), North West Leicestershire (£12m) and Surrey (£9m). It was also named preferred bidder for £45m of planned maintenance work for the City of Lincoln.

 

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