Outsourcing business Kier (KIE) gains 1.4% to 88.9p on a trading update which suggests things aren’t getting any worse for the ailing business.
The news comes ahead of an AGM which could see the company come under fire for its pay policy.
Working capital, net debt and trading are all in line and the company is on course to cut 1,200 jobs in the current financial year and achieve £55m of annual cost savings by the next.
Additional steps to take costs out of the business by outsourcing certain areas like IT and fleet management as well as shuttering offices suggests chief executive Andrew Davies suggests he is serious about making Kier a much leaner outfit.
Chief operating officer Claudio Veritiero is leaving with his responsibilities being shared between CEO Davies and finance chief Simon Kesterton.
SIGNS OF IMPROVEMENT
AJ Bell investment director Russ Mould says: ‘Kier is trying to do everything it can to turn its fortunes around. There are enough positives in its latest trading update to drive the shares up, but there are still lingering concerns that this is not going to be an easy recovery.
‘Media reports that its lenders are trying to offload Kier loans for as little as 70p in the pound would suggest they are trying to get out quick in case the business is unsuccessful with its recovery efforts.
‘Nonetheless, there are some signs that sentiment is starting to improve towards the business. The percentage of shares on loan to short-sellers - people hoping to profit from a decline in the share price - has halved since April.
‘There is an argument to suggest that Kier’s backdrop is looking more promising with expectations for greater government spending on infrastructure. Yet management are currently distracted from chasing opportunities by trying to keep the business afloat.’
