UK contractor Kier has issued a £40m profit warning, blaming increased costs associated with its Future Proofing Kier (FPK) programme and a tough trading environment for several of its businesses, Construction Manager reports.
In an update to the City this morning, Kier said it was experiencing "volume pressures" within its highways, utilities and housing maintenance arms, and its buildings business was facing lower revenue than previously forecast in 2018, despite a double-digit growth in its orderbook.
The company also warned that revenue in 2019 was likely to be flat compared with its 2018 figure of £4.3bn, and that its underlying operating profit its now expected to be £25m lower than previous expectations.
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Meanwhile, the costs of the FPK programme are now expected to be £15m higher than forecast. Kier said this was in part due to an acceleration of the programme following the appointment of Andrew Davies as chief executive.
Davies is leading a strategic review of the group "to consider ways of further simplifying it, the allocation of capital resources across the group and additional steps to improve cash generation and reduce leverage." The conclusions of the review will be announced on 30 July.
Image: Kier is the UK’s sixth biggest contractorÂ (Construction Manager)