Four our of five housing offices will close but group says overall profit is in line with expectations
Kier has confirmed it is to make swingeing job cuts in its residential division, reducing staff by 60%.
The company said it would close four out of its five residential offices, with the loss of 350 staff.
However, in its trading update Kier said that its overall pre-profit for the year ending 30 June will be "in line with current market expectations" and ahead of last year's result, despite a difficult year for the housing arm of the business.
The group said that despite tough conditions in housing and property it was seeing “little evidence of a slowdown” in construction and support services.
“These mixed market experiences reinforce the benefit of having a range of businesses operating in different sectors of the market,” it said.
Over the group as a whole, net cash balances during the year were reported to have been “strong”, ending the year at just over £140m, down from £148m a year earlier.
The construction division achieved a record cash balance at 30 June 2008. Both the construction and support services divisions were said to be performing strongly and profitably, with record order books.
The company said that a large proportion of the high level of tender awards in construction over the year had been generated through framework agreements.
Support services activities continued to grow over the year, particularly in building maintenance, which Kier said has “a strong pipeline of good opportunities”.
The property arm of the business achieved all its expected development sales for the year, despite rising yields and falling demand in the market. Financial close is due to be reached in the next few weeks on the group's property regeneration partnership with Network Rail.
The housing sector, however, saw a fall in sales to 1,767 completions from 1,438 the previous year. At 30 June the order book of exchanged contracts and reservations was around 45% down on the previous year.
The company said the cuts in its residential division constitute “appropriate action” to reduce its cost base, on the basis of a “very cautious” outlook for 2009.
“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. We will run a smaller, leaner operation in the future with our focus shifting towards affordable housing and regeneration,” it said.