A post-close update from Kier (KIE) has revealed net debt of £167m at 30 June, lower than the £200m forecast by analysts. The group had earlier anticipated net debt would exceed market expectations. Average month-end net debt of £422m is at the lower end of the £420m-450m range previously guided in June.
However, the contractor has warned that revenue for 2019 will be around £100m below last year when it reported £4.49bn in sales. Although trading in infrastructure services and buildings remained “resilient”, some property and land-led transactions were not completed in June. This may seem like just a small dent in revenue, but Peel Hunt estimates this will translate to a £10m shortfall in full year adjusted pre-tax profit versus the £107m consensus, with the same impact in 2020.
Citing “significant interest”, the group has commenced the sale of its housebuilding business, Kier Living, and should divestment occur, it will help further address net debt. Stifel anticipates around £100m of proceeds, below the net asset value of £120m given Kier is a “distressed seller”. Meanwhile, Simon Kesterton is to replace outgoing chief financial officer Bev Drew after full year results are announced on 19 September. Notably, Mr. Kesterton brings experience of implementing programmes involving disposal of non-core assets and cost control.
