Kier share price: what’s the outlook after profit warning sends stock plummeting?

Kier Group saw its share price plunge more than 40% last week after the company issued a profit warning to investors.

The news led to concern from shareholders, who were quick to make a comparison between Kier and its late rival Carillion, with the latter collapsing last year.

Future of HS2 and Crossrail unclear

The construction company’s profit warning leaves the future of large-scale infrastructure projects like HS2 and Crossrail into question, with Kier responsible for delivering both after admitting that its full-year profits are expected to come in well below forecasts. In fact, Kier downgraded its full-year profit forecast to £129 million, down from £169 million.

The news sent the company’s share price down by as much as 41% to 163p a share last week – the lowest it’s been since February 1999 – with the stock trading at 159p a share as of 12:10 GMT on Monday.

Emergency rights issue fails

To avoid collapsing like its rival Carillion, the construction and services company launched an emergency rights issue in December last year, with the company looking to raise around £264 million.

However, the fundraising attempt was not welcomed with open arms by investors, with only 38% of the shares taken up, leaving financial institutions to pick up the slack.

Things have only got worse for Kier, with short sellers beginning to catch wind of the ailing company, as several hedge funds bet against the business being able to make it back from the brink.

‘Kier is in a dark place,’ Senior investment manager at Brewin Dolphin John Moore told The Guardian.

‘At the turn of the year the business set out its financials, trading performance and future plans as part of its unsuccessful rights issue, only to now say that this information was largely wrong.’

‘It has broken trust with investors, which does not bode well,’ he added.