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17 Jun 2019 | 07:51

Kier Group to suspend dividend, sell assets in effort to lower debt

Kier Group said it would suspend dividend payments, cut jobs and sell assets as part of turnaround programme to lower its debt. Following a strategic review, the company said it would suspend dividend payments for FY2019 and FY2020, reduce headcount by about 1,200 and deliver annual cost savings of about £55m from FY2021. 'The reduced cost base will provide clear foundations for Kier's improved competitiveness and future growth; it will also enable investment in the Group's processes and delivery capabilities,' Kier said. The company also vowed to simplify its portfolio by selling or substantially Kier Living, Property, Facilities Management and Environmental Services businesses, which have 'limited operational synergies with Kier's core businesses.' Kier's Housing Maintenance and Middle East construction businesses would be retained by the group and be managed in a way that is consistent with the group's financial objectives, the company added. With the recent external commentary having had an adverse effect on confidence, with a consequential impact on the group's working capital position, the company said reported net debt at 30 June 2019 would be higher than current market expectations and an increase in FY2019 average month-end net debt to £420m to £450m.

But the revised strategy would result in a significant reduction in the Group's net debt during FY2020, Kier said.

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