A profit warning from Kier Group wiped nearly £260 million from the construction and property services firm’s market value yesterday.
Shares in the company fell more than 41% to 163.8p after it said the cost of its “future-proofing” programme would be higher than expected this year.
Underlying operating profits are now forecast to be about £25m lower than previous expectations, while hopes earlier in 2019 of a “positive cash position” by the end of the trading year to June 30 have given way to a prediction of net debt.
Kier’s Scottish construction division employs more than 220 people, including about 35 working out of offices in Westhill near Aberdeen, and Inverness. It handed over Aberdeen’s Music Hall at the end of last year after a major revamp of the 200-year-old building.
Current north and north-east projects for the firm include the £30m design and build of the new Alness Academy and a £6m refurbishment of Royal Cornhill Hospital in Aberdeen and Dr Gray’s Hospital in Elgin.
The group said it continued to face “volume pressures” in its highways, utilities and housing maintenance businesses.
While enjoying double- digit growth in the order book during 2018-19, revenue growth from its building division was worse than previously forecast.
In April, Kier announced that new chief executive Andrew Davies would lead a strategic review to consider ways of “simplifying” the group and achieving better allocation of capital resources.
The company said the review findings would be announced on July 30, but the net cost associated with its accelerated Future Proofing Kier (FPK) initiative is now expected to be about £15m higher than previously forecast.
Kier said it would give a further update on the FPK programme when it announces the conclusions of the strategic review.
Kier’s previous CEO was Haydn Mursell, who left earlier this year after a £250m emergency rights issue snubbed by nearly two-thirds of investors.