Kier share price trades higher after half-year results
The UK construction services and property group saw its share price soar on Thursday morning after it delivered an encouraging set of half-year results.
Kier Group shares soared more than 19% on Thursday morning after it delivered an encouraging set of half-year results that showed its turnaround strategy is bearing fruit. However, the company did still suffer a £41 million loss over the period.
‘I am pleased to report that many of the actions we outlined at the beginning of the year have been executed successfully,’ Kier Group CEO Andrew Davies said.
‘We have a new executive management team in place; we are continuing to embed Performance Excellence; and our cost reduction programme is expected to deliver benefits of at least £65m by 30 June 2021.’
Kier is trading at 121p a share as of 11:35 (GMT) on Thursday.
Cost cutting boosts profit at Kier
Cutting costs at the construction services and property group is essential for its survival, with the company getting rid of 420 jobs over its first six months of trading and a further 50 are forecast to go over the summer months.
Kier said its cost cutting programme is expected to save it around £65 million from lower overheads by June 2021.
Its results also showed that its cost reduction efforts have boosted its underlying profit, with it remaining flat despite revenue declining to £1.82 billion, down from £1.98 billion over the same period last year. In fact, the company’s underlying pre-tax margin grew from 1.5% to 1.7% over the period.
Kier Living sale ‘progressing’
Another key component in the company’s turnaround strategy and its efforts to strengthen its balance sheet is the sale of its residential unit, Kier Living.
In its half-year results, the company said that it is ‘progressing’ with the disposal of the unit but noted that it wrote down the value of the business by £59.8 million over the trading period.
The company’s relatively positive set of results will give investors hope for the future, with analysts from Liberum Capital and Peel Hunt both reiterating their ‘buy’ ratings for Kier in March.
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