Kier Group is to cut around 1,200 jobs and make savings of £55m over the next two years, amid a planned sell-off of many of its commercial interests.
Kier Living, Property, Facilities Management and Environmental Services are all set to be sold off or dramatically reduced due to debt and financing concerns.
A Kier LIving devlopment
In a statement to the market, the infrastructure company said that under the accelerated programme around 650 full time employees will have left by 30 June 2019 and an additional 550 are expected to leave during the financial year 2020.
'Following the completion of the programme, Kier expects to deliver annual sustainable cost savings of c.£55m from FY2021. The costs of delivering the programme are expected to be c.£28m during FY2019 and c.£28m during FY2020,' the firm said.
The Regional Building, Infrastructure, Utilities and Highways businesses are all expected to survive the chop.
'Together these businesses are expected to deliver long-term, sustainable revenues and margins and, with a renewed focus on their inherently cash generative characteristics, will be the core activities of the Group in the future,' Kier said.
A strategic review, accelerated amid recent debilitating market speculation, concluded that there had been insufficient focus on cash generation and the group has debt levels that are too high.
Kier said reported net debt at 30 June 2019 will be higher than current market expectations with an increase in this year's average month-end net debt to £420m-£450m.
'The Group has committed debt facilities of £920m, with its bank debt not maturing until June 2022 and the majority of its private placement debt maturing between 2021 and 2024.'
Newly appointed chief executive Andrew Davies said: 'Kier has a number of high-quality, market-leading businesses, in particular Regional Building, Infrastructure, Utilities and Highways. I believe that these businesses will deliver long-term, sustainable revenues and margins and are inherently cash generative.
'As previously announced, I have been leading a strategic review which has resulted in the actions being announced today. These actions are focused on resetting the operational structure of Kier, simplifying the portfolio, and emphasising cash generation in order to structurally reduce debt. By making these changes, we will reinforce the foundations from which our core activities can flourish in the future, to the benefit of all of our stakeholders.'
The Housing business is valued at £120m, while the Group's shares briefly rallied last week only to fall again in early trading.