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

2018 Ken Jack - Corbis

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

Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022
Interest rates might rise faster than expected – what does that mean for your money?
Global Economy

Interest rates might rise faster than expected – what does that mean for your money?

The idea that the US Federal Reserve could raise interest rates much earlier than anticipated has upset the markets. John Stepek explains why, and wha…
6 Jan 2022