Markets News

UPDATE 1-Kier resumes sale of homebuilding unit, profit slumps

(Adds shares, detail on results, background)

Sept 17 (Reuters) - British contractor Kier Group on Thursday said it has resumed the sale process for homebuilding unit Kier Living after it was stalled by the coronavirus crisis, and reported a 72.5% plunge in its annual pretax profit due to higher costs.

The group said adjusted pretax profit for the year ended June 30 was 16.9 million pounds ($21.90 million), compared with 61.4 million pounds a year earlier, hurt by expenses related to restructuring and the pandemic.

However, Kier’s shares jumped 11.8% to 61.2 pence by 0931 GMT, with analysts at Liberum saying the profit numbers were ahead of their expectations.

In the past year, Kier has been striving to lower its debt burden by suspending dividend for two years, cutting jobs, shutting offices and selling some units, in a bid to avoid collapse like peers Carillion and Interserve.

Kier, which delayed the publication of its results by a few hours due to a technical issue, said its order book at June-end stood at 7.9 billion pounds, with revenues for the year down 15% at 3.48 billion pounds. Net debt was at 310.3 million pounds, higher than it forecast.

“The effects of COVID-19 have reduced the amount of work we were able to undertake in the key final quarter of the financial year and costs have increased,” said Chief Executive Officer Andrew Davies.

However, Davies added that the company was well-placed to benefit from the proposed increase in UK infrastructure investment, which British Prime Minister Boris Johnson said in June he planned to double down on.

Kier also has two civil engineering contracts with France’s Eiffage under Britain’s largest infrastructure project by value, the HS2 rail project running between London and northern England. Its construction is expected to start later this year.

$1 = 0.7717 pounds Reporting by Yadarisa Shabong in Bengaluru; Editing by Devika Syamnath