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.
He said:
“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.