The Lemon Fool

As highlighted in Kier's FY2019 interim results, the Group continues to experience volume pressures within its Highways, Utilities and Housing Maintenance businesses. In addition, whilst continuing to perform well with double digit growth in its orderbook during FY2019, the Buildings business' revenue growth for FY2019 will be lower than previously forecast.

As a result, Kier now expects that FY2019 revenue will be broadly in line with the Group's reported revenue for the 2018 financial year and currently expects that the Group's underlying operating profit for FY2019 will be c. £25 million lower than previous expectations and that the Group is likely to report a net debt position as at 30 June 2019, which would have an adverse impact on its FY2019 average month-end net debt position.

Against the background of the revised guidance in respect of FY2019, Kier will provide updated guidance for FY2020 with its FY2019 preliminary results announcement on 19 September 2019.

Kier shares have tumbled more than 22% after warning that profits will not meet expectations this year.
It said underlying profit would be around £25m below previous expectation. It blamed higher costs and problems at units in the road, utilities and housing maintenance businesses.
Last year Kier launched a reorganisation aimed at cutting costs and selling none-essential businesses.

Construction and support services is just not a place you want to be now. Margins are paper thin and the outlook offers little of real promise.

In January, I was cautiously optimistic about Kier Group (LSE: KIE). The dividend was set to be cut right back as part of the infrastructure developer’s plan, along with a rights issue, to beef up its balance sheet.

At the time, I said: “Before I’d buy, I’d want to be convinced that the feared liquidity crisis has been averted, the mooted dividends look sustainable, and Kier’s performance is solid.”

Shock

And, wow, I’m so glad I waited! With a shock profit warning out of the bag on Monday, the Kier share price plunged 40%.

Troubled construction and services firm Kier has said it will cut 1,200 jobs to help make cost savings of £55m a year from 2021.
The company will sell its homebuilding business, Kier Living, and will shut or sell other interests, including its recycling and rubbish processing units.
Kier said it would focus on businesses including construction and road maintenance.
Shares in the company have fallen by more than 85% in the past year.
The shares fell a further 9% in early trading on Monday, to about 119p.

JoyofBrex8889 wrote:This is all looking wonderfully Carillion-esque.

I suspect the final reckoning here will see existing shareholders here wiped out.

Dod101 wrote:Pity there are at least two threads going on this topic as a result of the double postings in company news and HYP Practical but there you go.

Dod

monabri wrote:if it is as successful as the last call....

Low margin companies.....avoid!! One screw up and it's a problem. I learned the hard way with the likes of Carillion. Just don't go there!