UK builder Kier to cut 1,200 jobs

Bloomberg

Kier Group Plc plans to cut 1,200 jobs, exit businesses and suspend dividends as the British engineering company struggles to rein in debts piled up during a rapid expansion.
Chief Executive Officer Andrew Davies is pulling Kier out of homebuilding and property maintenance to focus on construction of other buildings and infrastructure such as roads and railways. The job cuts represent over 13 percent of the current workforce, according to its most recent annual report.
Shares of Kier fell as much as 13 percent to their lowest since the firm’s 1996 initial public offering after the company issued new debt figures that deepened concerns over its balance sheet.
“Kier’s higher average month-end net debt of 420-450 million pounds is very disappointing, especially on the heels of previous negative surprises on debt, and demonstrates that the 2018 rights issue failed to stabilise its balance sheet and restore investor trust,” said BI analyst Iwona Hovenko.
Davies, who took over in March, is trying to stop Kier suffering the same fate as industry rivals Carillion Plc and Interserve Plc, which collapsed after taking on projects that offered only thin profit margins and exposed them to heavy liabilities in case of delays or unforeseen problems. On an investor call, he said the group’s debt is too high and it has a number of businesses that are incompatible with its new, simplified strategy. It also plans to exit facilities management and environmental services.
“At its core, Kier is a great company,” Davies said. “But we do need to administer self help.”