More cuts due as Kier sets aside £7.6m for restructuring

Grant Prior 11 years ago
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Restructuring at Kier will cost another £7.6m as the contracting giant continues to close regional offices and dispose of “non-core” assets.

Kier has already spent £4.4m on restructuring as its regional network has been slimmed down and its scaffolding business disposed of.

But there is more to come in the next few months as chief executive Paul Sheffield confirmed another round of cuts as Kier revealed its interim results for the six months to December 31 2012.

Pre-tax profits were down to £27m from £34m last time as turnover fell to £976m from £1,046m.

Sheffield said: “As we are exposed to today’s difficult environment, particularly in UK building, we are taking steps to restructure the business to reflect the scale of future opportunities.

“This restructuring will continue through the second half of the financial year.”

The firm reported an exceptional charge of £4.4m during the period to pay for restructuring with a total of £12m expected for the full financial year.

Cash generation has been a problem during the six months compounded by the spread of project bank accounts on public jobs and the tighter payment terms on framework agreements.

Construction revenue dropped to £627m from £720m as margins fell to 2.1% from 2.5% which Kier said was “a good result in today’s shrinking and increasingly competitive market.”

Public sector schemes account for half of Kier’s construction work with education schemes accounting for 29% of wins.

Sheffield said: “The Construction division is well established in its key markets; however margins and working capital continue to tighten in the current competitive trading environment.

“Accordingly we have undertaken a comprehensive review of the division, particularly the UK building activities, to restructure the business in light of the forecast market conditions and to ensure that we drive efficiency throughout our operations to hold margins close to current levels.

“This will involve the closure or disposal of non-core activities and restructuring our network of offices.

“The process will continue in the second half of the year however it will not compromise our commitment to a regional focus or the delivery of our services to customers, but will position us well to respond to any market recovery.”

 

 

 

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