UK construction firm Kier has announced it is to sell its house building business, Kier Living, and will close down its recycling and rubbish processing units saving £55m.
The decision confirmed earlier today is likely to result in the loss of 1,200 jobs in a two-stage process as the firm looks to make annual savings.
650 employees are expected to leave the business at the end of this month with a further 550 jobs being cut over the next 2 years.
While the construction industry is still reeling from the collapse of Carillion eighteen months ago, the sale of Kier Living is expected to provide financial benefits including a reduction in the group’s use of supply-chain financing and off-balance sheet debt.
Recently appointed Kier chief executive, Andrew Davies, is working to a strategy streamline the group which blames higher costs and persistent pressure on its highways, utilities and housing maintenance businesses for tumbling share value.
“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.”
Kier has released a strategic review that sees Kier Living as a strong business but with “limited operational synergies” with other parts of the Group. The board has determined Kier Living is non-core and has commenced a process to sell the business, already attracting interest from potential buyers,
The sale of Kier Living is expected to provide financial benefits beyond a reduction in net debt due to the release of associated working capital and a reduction in the group’s use of supply-chain financing and off-balance sheet debt.