20th Mar 2019 08:32
LONDON (Alliance News) - Kier Group PLC slashed its interim dividend Wednesday as profit dived ahead of welcoming its new boss, but the firm retained its forecasts despite the tough market.
Shares in Kier were 8.5% lower at 440.25 pence on Wednesday.
For the six months ended December, the construction firm sank to a GBP35.5 million pretax loss from a GBP34.3 million profit the year prior. This was despite revenue rising 1.4% to GBP2.19 billion from GBP2.16 billion the year before.
Profit performance was hurt by a sharp rise in one-off costs to GBP74.5 million from GBP15.1 million the year prior. The costs were primarily due to combined provisions of GBP51.0 million associated with its Broadmoor Hospital project and Environmental Waste contract.
Underlying pretax profit - excluding exceptional costs - narrowed 21% to GBP39.0 million from GBP49.4 million the year prior.
"Our regional building and property development businesses continue to operate well, although we are experiencing some volume pressures in the highways, utilities and housing maintenance markets," Kier Executive Chair Philip Cox said.
Cox assumed the roles of executive chair in late January. This was after former chief executive Haydn Mursell stood down.
On Tuesday, Kier announced that former Wates Group Ltd boss Andrew Davies will take up the helm from mid-April. Davies left Wates in late 2017 and had been set to become chief executive of construction peer Carillion PLC in January 2018, but Carillion collapsed into administration before he could take up the position.
Of Kier's own finances, Chair Cox said: "The group has a significantly strengthened balance sheet following the completion of the rights issue in December 2018. The board continues to focus on simplifying the group, improving cash flow generation and net debt reduction, and forecasts a net cash position at 30 June 2019."
In December, Kier targeted a GBP250 million cash raise through a rights issue. In the end, the offer only received a 38% uptake from investors. Net debt fell to GBP180.5 million from GBP238.5 million the year before.
Following the rights issue, Kier cut its interim dividend 79% to 4.9 pence per share from 23.0p the year prior.
"Whilst the board notes the current political and economic uncertainty in the UK, and the implications for third party investment," Cox continued, "the group is maintaining its underlying financial 2019 expectations, with the full-year results being weighted towards the second-half of the financial year, as expected."
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