Construction firm Kier has seen shares surge higher after upping its half-year results outlook amid reports it is nearing a sale of its embattled housing division.
Shares in the Manchester-based company rose 12% after a bullish update revealed that interim figures will be slightly better than expected and a significant improvement on the £41.2 million losses a year ago.
The group said it is making progress on the sale of its loss-making housing arm Kier Living, which was put up for sale more than 18 months ago.
It is understood to be just days away from entering exclusive talks on a sale of the division, with private equity veteran Guy Hands said to be among those on the shortlist.
Kier confirmed it is also still looking at a possible investor cash-call to shore up its balance sheet as it continues to struggle under a hefty debt pile.
The firm said its month-end net debt for the six months to December 31 remained at a similar level to last year’s £436 million.
It has been leading an overhaul announced in June 2019 to slash costs and sell off unwanted businesses, including Kier Living.
At the time, it said it wanted to cut annual costs by £60 million from 2020-21, but it said it now hopes “self-help” measures will trim costs by £105 million.
In its rosier half-year update, the group also said site productivity improved despite Covid-19 restrictions, while it cheered a number of new business wins, including a contract with Transport for London worth around £200 million.
This has seen its order book lift slightly above its year-end levels, according to Kier.
Analysts at Peel Hunt said it was a “reassuring update”.
“Strategic actions continue to progress and we see scope for outperformance,” they added.