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The company said the highways, utilities, housing maintenance and buildings divisions will be particularly affected and revenues will be flat at around £2.5bn.
Shares in the business plunged more than 40 per cent in early trading Monday to 163.2p – a new all-time low for the firm.
New chief executive Andrew Davies, who is carrying out a review into the business, also revealed that the costs for its “future-proofing” project will more than double – costing £29m compared with £14m originally earmarked.
The review is expected to be completed by the end of July and had originally said the net savings from the plans would be around £20m by 2020.
Mr Davies was due to take on the top job at failed outsourcer Carillion, but the group went bust before he could take up the role.
The conclusion of his Kier review will be announced in July.
Kier saw shares rise more than 3 per cent to 359.7p after the announcement.
Prior to the ill-fated Carillion appointment, Mr Davies was formerly chief executive of property and construction company Wates Group.
He also previously spent more than 28 years at BAE Systems, latterly as managing director of the maritime division.
The struggling highways, utilities and housing maintenance businesses include laying internet cables for Virgin Media, working with Scottish Water and roadworks on motorways across the country.
Bosses at Kier, which is a major contractor for the Crossrail and HS2 railway projects, said the extra costs are due to an “acceleration of the programme” under the new chief.
The latest snapshot measure of activity in the sector, based on a survey and known as the Purchasing Managers’ Index (PMI), came in at 45.3 – substantially below the 50 level that indicates no change from the previous month.
That is the second-lowest level since April 2009, when the economy was still in the midst of a recession triggered by the financial crisis. The worst reading since then was in June, an only slightly lower 43.1.
“If the current speed of construction sector retrenchment is sustained, it will soon ripple through the supply chain, and spillovers to other parts of the UK economy will quickly become apparent.”
The measure of the sector’s optimism about the year ahead dropped to its lowest level since November 2012 as firms worried about Brexit, the prospect of a general election and delays to infrastructure work.
In the nearer term, the outlook was also bleak as the number of new orders fell sharply, with firms blaming mainly a sluggish economy and political uncertainty.
Howard Archer, chief economic adviser to the EY ITEM Club, pointed out this was the first time since 2016 that new orders had fallen for four successive months.
“The weak July construction survey increases the concern that the UK economy has started the third quarter poorly, after GDP likely stagnated in the second quarter and could have contracted marginally,” he said.
The PMI measure of the larger manufacturing sector, released on Thursday, was also weak, coming in at 48 – the same as in June and the lowest level in six and a half years.
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