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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 Markit/CIPS UK Construction Purchasing Managers’ Index recorded a reading of 48.6 for May, down from 50.5 in April. Economists were expecting a figure of 50.5. A reading above 50 indicates growth; below represents contraction.
Last month’s reading is the lowest since extreme weather during last year’s Beast from the East prevented construction work from going ahead in March 2018. It is also the third time the sector has contracted in the past four months.
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