SHARES in construction firm Kier Group plummeted as it announced 1,200 job cuts under a major review of its business.
The firm’s shares suffered again as the firm announced it is to focus on activities including construction and roads maintenance, with the price down 17.43%, or 22.8p, to 108p at one stage.
The announcement came as it completed a strategic review under new chief executive Andrew Davies which identified ways to generate cash and reduce its debt pile.
It said the programme has been accelerated so that 650 full-time employees will have left by the end of this month.
A further 550 are expected to go by the end of the 2020 fiscal year.
READ MORE: Kier issues surprise profit warning
The company did not say how many employees in Scotland would be affected.
The move is expected to create £55 million of annual cost savings from the 2021 financial year onwards.
This is after a £28m annual cost for the restructuring in both this year and next.
Kier, which has around 20,000 employees across the UK in total, also concluded that its portfolio is “too diverse”.
Mr Davies said: “Since becoming chief executive on April 15, I have visited many of our key locations and spent time with all of our businesses, meeting the leadership teams and many of our dedicated people in the process.
“I have also met with many of our clients.
“Kier has a number of high-quality, market-leading businesses, in particular regional building, infrastructure, utilities and highways.
“I believe that these businesses will deliver long-term, sustainable revenues and margins and are inherently cash generative."
READ MORE: New Kier boss begins with business review
He said: “I have been leading a strategic review which has resulted in the actions being announced today.
“These actions are focused on resetting the operational structure of Kier, simplifying the portfolio, and emphasising cash generation in order to structurally reduce debt.
“By making these changes, we will reinforce the foundations from which our core activities can flourish in the future, to the benefit of all of our stakeholders.”
Kier will sell off housebuilding business Kier Living, its property development business which operates in England and Wales, and its facilities management and environmental services arms.
The firm said the disposals and cutbacks “are expected to deliver a material reduction in the overall indebtedness of the group” and “reduce the historical volatility in the group’s working capital profile”.
“Going forward, Kier will focus on managing its retained businesses to deliver long-term profits and a sustained reduction in the group’s underlying debt levels rather than targeting lower debt positions at reporting dates”, it said.
“While some of the recent external commentary has had an adverse effect on confidence, with a consequential impact on the group’s working capital position, the group’s liquidity headroom is able to absorb the volatility that this has caused.
“However, it will result in reported net debt at June 30 being higher than current market expectations and an increase in FY2019 average month-end net debt to £420m-£450m.
“Kier is in regular dialogue with its largest customers who continue to be supportive during this period of volatility.”
Kier was working on the restoration of Glasgow School of Art when it was hit by fire last year. It had been the main contractor on the restoration of the Mackintosh Building after a first fire in 2014, and had made significant progress before the second blaze.
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