Kier share price dips as group unveils overhaul plan

Kier’s share price (LON:KIE) has fallen deep into the red in London this Monday as the company unveiled plans to sell its housebuilding and property businesses, cut about 1,200 jobs and suspend its payout to shareholders. The move came after the company recently warned on profits amid higher costs and pressures on its highways, utilities and housing maintenance businesses.

As of 10:07 BST, Kier’s share price had given up 10.17 percent to 117.50p, significantly underperforming the FTSE 250 index which has climbed marginally higher and currently stands 0.26 percent up at 19,167.95 points. The group’s shares have given up some 88 percent of their value over the past year, as compared with about an eight-percent dip in the mid-cap index.

Kier unveils overhaul plan

Kier Group announced in a statement this morning that the company had concluded its strategic review under new chief executive Andrew Davies who has been looking to simplify the company. The mid-cap group said that it had started a process to sell its housebuilding business, Kier Living, having concluded that it is a non-core operation. The company will further accelerate a reduction in the level of capital invested in its Kier Property business, which may extend to its sale.

Kier further unveiled plans to suspend dividend payments for FY2019 and FY2020, and announced that it will restructure the group to reduce headcount by about 1,200 and deliver annual cost savings of about £55 million from FY2021.

Analysts on mid-cap group

Reuters reported that analysts at Liberum, who have a ‘buy’ rating on the stock, slashed their target on the Kier share price from 320p to 150p.

“Disposals can reduce debt and probably more importantly reduce leverage ratios,” the broker pointed out, adding, however, that “events are moving fast and disposals are likely to be complicated, given the joint ventures in property and residential, they will be very dilutive”.