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Kier warns of Brexit fallout after £245m loss

Julia Kollewe
Photograph: HS2/PA

Kier Group, the embattled construction and services company, has warned of flat revenues this year due to Brexit uncertainty as it crashed to a £245m annual loss.

The firm, which works on large infrastructure projects including Crossrail and HS2, is battling to avoid a repeat of the financial collapses that hit rivals Carillion and Interserve. The sudden failure of Carillion in January 2018 raised fears over the health of the wider outsourcing sector.

Kier said it had set up a Brexit taskforce but confusion surrounding the UK’s departure from the EU could delay client decisions. It did not expect its revenue to increase in 2020, adding that Brexit could also disrupt operations, particularly in relation to materials, employees and the supply chain.

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The company slumped to a pretax loss of £245m in the year to 30 June, against a profit of £106m the year before. Revenues fell slightly to £4.5bn. Kier shares fell 14% in Thursday morning trading.

Kier announced in June it was cutting 1,200 jobs in the UK from its 19,000-employee workforce – 650 this year – to help trim debts. It has also suspended dividend payments for this year and 2020.

Andrew Davies, the chief executive, who took over in April, said: “Kier experienced a difficult year, resulting in a disappointing financial performance. However, we are building firm foundations for the future: we have a new management team in place, we have defined our strategic priorities and we are taking decisive actions to deliver them.”

He said the company had a strong order book and the sale of its homebuilding business, Kier Living, was progressing well. The company was also shutting or selling its recycling and rubbish-processing operations to focus on infrastructure, regional construction, utilities and road maintenance.

Davies said: “The reshaping of the group is designed to reduce its overall indebtedness during 2020 and to restore Kier to robust financial health.”

Kier’s chair, Philip Cox, is to retire and step down from the board once a successor has been appointed.