Features

Kier scraps its dividend – how much lower can its share price go?

Shares in construction services company hit a fresh low today, as the company scrapped its dividend payout and announced plans to cut 1,200 jobs in the UK.

190617-kier-group

979514572

Shares in construction services company Kier Group (LSE: KIE) hit a fresh low today, as the company scrapped its dividend payout and announced plans to cut 1,200 jobs in the UK, and to sell its house-building and property businesses.

More importantly, the company's net debt was a good deal higher than analysts had expected, coming in at an average of £420m to £450m, versus market's expectations for £360m. This, reports the Financial Times, was blamed on "customers losing confidence because of external commentary' about the state of its finances".

The company will be hoping that decisive and drastic action can help it to draw a line under the situation before confidence collapses altogether.

Kier warned on profits a fortnight ago under its new chief executive, Andrew Davies. Davies is restructuring the group with the aim of focusing on infrastructure (including HS2 and London's Crossrail), regional construction (of schools and hospitals, for example), utilities and road maintenance.

"At the heart there is a great business in Kier, particularly around the four core groups. We will administer self-help to this business," said Davies.

The share price has now lost around 90% of its value in a single year. In December, the group was forced to launch a £264m fundraising (at 409p a share it's now trading closer to £1) which flopped.

Investors are understandably jittery after the collapse of heavily-indebted rival outsourcer Carillion last year.

To add insult to injury, troubled fund manager Neil Woodford owns a significant stake in Kier in his funds.

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Four investment trusts for income investors to buy now
Investment trusts

Four investment trusts for income investors to buy now

Some high-yielding listed lending funds have come through the crisis with flying colours. David Stevenson picks four of the best.
12 Apr 2021
Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021