Kier has revealed that its operating profit will be around £25M lower than previously forecast this year.
Following the announcement, shares in the FTSE 250 firm fell by more than 40% to 158.6p in early trading – the lowest since February 1999.
Kier has also said its “Future Proofing Kier” company reform programme will cost around £15M more than previously anticipated.
The firm said: “The group continues to experience volume pressures within its highways, utilities and housing maintenance businesses.”
It said the higher costs of its reform programme “reflects an acceleration of the programme following the appointment of Andrew Davies as chief executive”.
Kier is set to make its full-year preliminary results for the year to 30 June on 19 September.
Earlier this year, Davies has launched a strategic review into the debt-ridden business.
Davies confirmed the top-to-bottom review will explore ways to simplify the business. Other areas to be explored by the review, according to Kier, would be the allocation of capital resources across the firm and additional steps to improve cash generation.
Before Davies’ arrival, Kier’s board had already spent months re-evaluating the group strategy and are set to reveal their findings in July.
Revenue under Mursell’s tenure as chief executive rose from £2.91bn in June 2014 to £4.24bn in June last year. But Kier’s total borrowing nearly doubled over the same period from £235M to £536M.
Last month, Kier revised its end-of-year financial statement for the six months to the end of December 2018, declaring an additional £50M of debt that went unnoticed due to an “accounting error”.
The revised figures raised the net debt as of the end of December 2018 from the previously stated £130M to £180.5M. A large portion of the additional debt comes from Kier taking a £25M hit on a delayed hospital project.
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