Increasingly accident-prone outsourcing firm Kier (KIE) drops 38% to 172.3p as it warns on profit, citing ongoing volume pressures within its highways, utilities and housing maintenance businesses.
The company has endured a torrid 12 months, punctuated by the departure of its CEO in the wake of a botched rights issue and its market value is now around a tenth of what it was five years ago.
Kier expects 2019 revenue to be broadly flat year-on-year and underlying operating profit for the year to be around £25m lower than previous expectations.
The group is likely to report a net debt position as at 30 June 2019, which would have an adverse impact on its 2019 average month-end net debt position.
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Against the background of the revised guidance in respect of 2019, Kier says it will provide updated guidance for 2020 with its full year results announcement on 19 September 2019.
The downgrades come as the company also reveals the net costs of its turnaround programme for 2019 will be £15m higher than previously forecast, owing to an acceleration of the programme following the appointment of Andrew Davies as chief executive in April.
AJ Bell investment director Russ Mould says: ‘The spectre of collapsed outsourcer Carillion means when a rival or peer unveils a profit warning it generally carries greater weight. It is little wonder that Kier lost nearly a third of its value this morning.
‘If investors can take any comfort, it is probably from the fact that new CEO Andrew Davies is wasting no time in getting a handle on the situation. The increased restructuring expense is a consequence of him accelerating this process.
‘Davies will need to come up with a compelling vision when he announces the results of his initial strategic review on 30 July, otherwise Kier risks being placed firmly on the discard pile by the market.’
