Kier: we’re not bailing out of housebuilding

A spokesperson for the contractor and housebuilder clarified the company’s position after John Dodds, its chief executive, said the traditional model of housebuilding would disappear from the business. That led to reports that Kier would be the first housebuilder to leave the industry.

The spokesperson said: “It’s not true to say we are exiting housebuilding. After a restructure of the business it has become a much more limited operation but will continue where there is a demand.”

He added: “The traditional model will be lost because land will also be used by the affordable housing and property divisions.”

The company posted an 18% fall in pre-tax profit for the year ended 30 June 2008, from £77.6m to £63.4m. It blamed the fall on land writedowns and restructuring costs caused by the effect of the downturn on its housing and property businesses.

Kier’s underlying performance was strong, with turnover rising 12% from £2.1bn to £2.4bn.

Dodds said the results were a tale of two halves. “Continued demand in our construction and support services businesses has contrasted with the sudden and dramatic effect of the credit crunch on the demand for private housing and development properties.”

It has become a much more limited operation, but will continue where there is a demand

Kier spokesperson

Land writedowns totalled £31.3m and it also took a £9.5m hit in restructuring and redundancy costs as a result of the collapse in demand for housing. These exceptional costs were offset by a £16.2m profit on the sale of its 50% investment in the Hairmyres Hospital PFI scheme in Scotland.

Home sales over the year fell 19% from 1,767 to 1,438. Sales of 611 in the second half were 35% down on the same period in 2007.

A company statement added: “Gross reservations for the first two months of the new financial year are about 76% below the same period last year, reflecting continued tightening of mortgage availability and a general slowdown in demand.”

Kier finished the year with net cash of £144m.