Shares fall to their lowest level in 20 years as they tumble more than 40%.
Kier Group (KIE) shares crumble on profit warning
- Shares in the construction group have tumbled more than 40% this morning in wake of shock profit alert.
- The group’s woes have been building due to pressure within its highways, utilities and housing maintenance business as well as higher costs.
- We don’t have a formal view on the company today’s announcement had a bleak tone and investors should be extremely wary.
The construction and services group Kier has issued a profit warning today, sending its shares falling by more than 40% to their lowest level in 20 years. The company said the warning was due to pressure within its highways, utilities and housing maintenance business. On top of this, there have been higher costs associated with an internal programme aimed at improving efficiency, which has been accelerated since new CEO Andrew Davies took up the role earlier this year. While revenue for 2019 is expected to be similar to last year, underlying operating profit will be £25m lower than previously expected and the debt position has also worsened.
It wasn’t surprising to see the shares slump by 42% in early trading in response to all of this bad news. They are now down 85% over the past year and there are clearly fears in the market that the company could be heading for the same fate as Carillion. The company is now carrying out a strategic review and investors will hope that some good news emerges from that on 30 July when it is due to report. Dividends are already expected to drop by 75% this year and that could worsen further as the year goes on. While we don’t have a formal view on the company today’s announcement had a bleak tone and investors should be extremely wary.
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