Kier share price: 3 things to watch out for in its half-year results

Since completing an emergency rights issue in December last year which saw only 38% of shareholders take up the call, leaving Kier Group’s lenders to holding around £100 million of new shares, the company continues to struggle.

However, over the last seven weeks the company’s stock has made significant gains, with investors showing their support for the management’s turnaround strategy which aims to strengthen its balance sheet through cost cutting and asset disposals.

Kier will unveil its full-year results on Thursday, with investors eager for an update on the company’s performance now that its share price has finally stopped tumbling.

Kier stock up 120%+ since August

Since the start of August, Kier’s stock has climbed more than 120% from 61p to 136p a share as of 12:15 GMT on Monday.

However, despite the company finding its bottom, it has a lot of work ahead of it if it wants to claw back the losses its stock has suffered, with it falling more than 80% over the last 12 months, down from £10.18 a share this time last year.

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Investors eager for update on cost-cutting strategy

The company has taken steps to reduce costs and strengthen its balance sheet through its Future Proofing Kier (FPK) programme. Over the first six months of trading, the company has delivered £4 million in savings and plans to be earnings and cash flow neutral at the end of the financial year.

The FTSE 250 company’s new CEO Andrew Davies announced in June that the group will cut 1,200 jobs to reduce costs and reduce debt to avoid joining rivals Carillion and Interserve on the scrap heap.

Kier plans to generate net savings of £20 million in 2020, driven by increased cost savings and continued progress of its disposal programme, with it completing the sale of Kier Highways Services Australia at the end of last year.

Kier looking for strong end to 2019

The company’s regional and property development units continue to operate well, though there are some volume pressures in the highways, utilities and housing maintenance markets.

‘I believe that these businesses will deliver long-term, sustainable revenues and margins and are inherently cash generative,’ Davies said earlier this year.

The company has blamed ongoing political and economic uncertainty over Brexit for hampering third party investment, though Kier has left its full-year guidance unchanged, with its full-year results weighted towards the second-half of the year.