Kier's housebuilding division: 350 jobs go as 4 offices shut

Kier has embarked on a major shake-up of its residential housebuilding operation with the loss of 350 jobs.

Four out of five offices are closing and the 60% reduction in headcount will take employee numbers from around 600 today to just 250.

The offices closing are:

• Spalding, Lincolnshire
• Borehamwood, Herts
• St Neots, Cambridgeshire
• Glasgow

As a result the entire residential housebuilding operations will be run from the group's headquarters at Tempsford, Beds.

During the year to the end of June, housing sales of 1,400 were down on the previous year’s figure of 1,800.

The slowdown will run on as the number of exchanged contracts at the year-end was 45% lower than at 30 June 2007.

Kier said: “We have reinforced our controls over build expenditure and work-in-progress and, since the spring of this year, have ceased the use of part-exchange as a selling tool.

“Land expenditure in the last quarter of the year has been limited to settling land creditors, committed payments and exercising options. We will continue this approach until the outlook becomes clearer.”

Looking ahead, Kier plans to shift its housebuilding focus onto affordable housing and regeneration.

The news comes as Kier announces today (18 July) that it has lifted its pre-tax profit and once the final details are unveiled, a figure of £87m is expected, ahead of last year’s pre-tax profit of £78m, despite the turmoils within the group’s housebuilding operation.

Kier’s financial year ended on 30 June and the full details will be revealed on 18 September.

In the previous year, Kier’s turnover pushed through the £2bn barrier for the first time as the group hit a figure of £2.1bn. The group is a hybrid with two major areas of operation: construction and housebuilding.

Kier’s construction and support services activities, by contrast, are still relatively star-spangled with:

• little evidence of slowdown in any of the markets
• record orderbooks

The strength of these activities has left Kier with a cash balance at the end of the year of more than £140m, within a whisker of the pot at the end of the previous period.

Kier’s property business has deteriorated over the last few months as occupier demand has slowed. Even so, Kier achieved all of its expected development sales for the year to 30 June 2008.

John Dodds, chief executive, summed up the group’s position saying: “Our construction and support services businesses continue their profitable, cash-generative growth. Our balance sheet is strong and our cash balances remain high.”