The construction firm narrowed its losses in the six months ended 31 December 2019, but the cost of an extensive restructuring and “challenging market conditions” continued to impact its bottom line, it said.
Pre-tax losses stood at £41m for the period, a slight improvement on the £45m pre-tax loss it recorded for the same period in 2018.
Revenue was down 10% year-on-year to £1.8bn, from £2bn in 2018 due to challenging market conditions, Kier said in a filing to the London Stock Exchange on Thursday. Pre-tax profits were flat at just over £30m, mainly impacted by £72m of one-off exceptional costs the company incurred during the period.
Most of this was attributable to a total £48.8m spent on a restructuring programme launched by chief executive Andrew Davies after he joined the firm in April 2019. As part of the programme, Kier axed 420 jobs during the six-month period, incurring related costs of £16m, with a further 50 employees set to leave the business before the end of June.
The restructuring is expected to see the loss of 1,200 jobs in total and the closure of Kier’s headquarters at Tempsford Hall in Bedfordshire. Kier said it anticipates saving £65m by June 2021 as a result of trimming its workforce.
Overall operating profit excluding the cost of exceptional items rose to £46.7m from £41.9m in the same period of 2018.
Andrew Davies, chief executive of Kier, said: “I am pleased to report that many of the actions we outlined at the beginning of the year have been executed successfully.
“In particular, the decisive cost actions we have taken are now benefiting the group and have more than compensated for the challenging market conditions we experienced in the period. These actions resulted in an increase of 3.4% in operating profit before exceptional costs.”
The group said it was encouraged by the award of several frameworks including the £30bn Construction Works and Associated Services Framework for the Crown Commercial Service, the £2bn Hyde Main Contractor Framework, and the £125m Norfolk County Council Major Construction Work Framework.
In the North West, Kier recently started work on the £21m First Light Pavillion at Jodrell Bank while it continues on site at Manchester Metropolitan Univeristy’s £35m School of Digital Arts where it broke ground last November.
The company also decided as part of its 2019 strategic review that it would dispose of Kier Living, the group’s residential arm, and is in the process of looking for a buyer, according to the statement.