Kier Axes 350 Jobs as Latest Victim of the Housing Crash; CONSTRUCTION

The Birmingham Post (England), July 19, 2008 | Go to article overview
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Kier Axes 350 Jobs as Latest Victim of the Housing Crash; CONSTRUCTION


Byline: By Tom Scotney Business Staff

Construction group Kier said it would be axing 350 jobs at its faltering housebuilding division yesterday, as it became the latest victims of the housing market slump.

The firm said it would be concentrating on housing support and regeneration projects like the pounds 67 million Snow Hill development in Birmingham after closing its four regional housebuilding offices as a result of plummeting sales.

The residential division has shrunk by 60 per cent since the start of the year when it employed 600.

It will be operating solely from its last remaining office, in Bedfordshire, after announcing offices in Cambridgeshire, Hertfordshire and Glasgow were set to join the Lincolnshire branch, which was closed in May.

Like most other housebuilders, Kier has been hit by the chill in the housing market in recent months.

Completions for the year ending June 30 were down nearly 20 per cent to 1,438 units, while the group's order book was down 45 per cent on the previous year.

And conditions in the residential property market have continued to get worse over the last few months, with occupier demand slowing even further.

The firm's land expenditure budget has been reserved for settling debts, with no further purchases planned until the future of the housing market became clearer.

Sales at Kier's housebuilding group only account for a small proportion of group sales, but a relatively large proportion of overall profits.

Kier stressed that its core construction and support service divisions were still seeing good levels of growth.

And it pointed out it was still expecting underlying pre-tax profits for the firm to meet expectations, and to be ahead of the year before.

In 2006-07, the group reported underlying pre-tax profits of pounds 79.6 million on total sales of pounds 2.13 billion.

The firm said it would be changing to focus on its more profitable operations. In a statement, a Kier spokesman said: "Whilst the market for our homes has continued to deteriorate over recent months, we are responding to reduced demand by significantly reducing our residential overheads.

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