Kier share price set to trade lower as company ponders capital raise after Covid-19 hurts sales

The British infrastructure company could see its share price come under pressure over the summer after the business ponders a cash injection to shore up its balance sheet as the coronavirus pandemic hits revenues.

Kier Group could see its share price come under pressure over the summer after the business revealed it is pondering a fresh cash injection to shore up its balance sheet as the coronavirus pandemic continues to take its toll on revenues.

Earlier this month, the ailing construction, services and property group said that lower revenues, brought about by Covid-19, is leading to lower levels of working capital inflow, with net debt for the year expected to hit £440 million.

‘As a result of Covid-19, over the next 12-18 months, further actions will be taken, including: continuing to implement a range of self-help measures, driving a further increase in the group's operating cashflows, continuing the process to sell Living and a potential equity issue," the company said in a trading update.

Kier Living sale to cut debt on hold

Kier put its Living housebuilding business up for sale last June in a bit to reduce the amount of debt on its balance sheet.

However, the process to dispose of Kier Living and the evaluation of the options for its property business have both been paused until further notice.

‘The majority of our sites have remained open during the period, operating in accordance with the group's site procedures which have been adapted to reflect Public Health England's guidance,’ Kier Group CEO Andrew Davies said in a statement.

‘Over the past few months, we have taken a number of decisive management actions, which are delivering significant benefits and are enabling the group to maintain a good liquidity position.’

Kier expands cost-cutting measures

To mitigate the impact of the Covid-19 crisis, the company has expanded its cost saving programme and focused its attention on reducing its debt pile. Kier also said that it remains on track to deliver cost savings of at least £65 million for the financial year ending on 30 June 2021.

In order to deliver on its cost savings, around 6500 employees, including its executive committee and board of directors will all take a reduction of 7.5% - 25% of their base salaries between April and June.

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