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BREAKING NEWS

Kier swings to losses as costs to fix balance sheet mount

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(Reuters) – British contractor Kier Group Plc <KIE.L> posted an annual loss on Thursday as a radical overhaul of the business to lower debt pushed costs higher.

Kier, in the middle of a major revamp under its new boss, reported an operating loss of 217 million pounds in the year ended June 30, from a profit of 134 million pounds a year earlier.

The company, which has worked on projects such as the HS2 high speed rail network and Facebook Inc’s <FB.O> new London HQ, also reported 341 million pounds in charges, including the costs of preparing to exit or sell businesses, restructuring costs and significant contract losses.

Under Chief Executive Officer Andrew Davies, who took charge in April, Kier has said it will sell its housebuilding and property businesses, cut about 1,200 jobs and suspend its dividend for at least two years in its bid to lower debt and stabilise the business.

The restructuring plan came after Kier warned on profit, blaming higher costs and pressures on its highways, utilities and housing maintenance businesses. The company also failed last December to convince shareholders to back a rights issue at 409 pence per share.

Operating profit before exceptional items fell 34% to 124 million pounds, while Kier’s order book stood at 9.4 billion pounds at the end of June, compared to 9.8 billion pounds a year earlier.

However, net debt at the end of June was 167 million pounds, lower than 186 million pounds a year earlier, while average month-end net debt was 422 million pounds from 375 million pounds a year earlier.

“Kier experienced a difficult year, resulting in a disappointing financial performance. However, we are building firm foundations for the future,” CEO Davies said in a statement.

Kier also said separately that its chairman, Philip Cox, would retire once a successor has been appointed.

Shares in Kier, which listed in 1996, were seen trading 10% lower on Thursday.

(Reporting by Noor Zainab Hussain and Justin George Varghese in Bengaluru; Editing by Saumyadeb Chakrabarty)

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