(Reuters) - British builder Kier Group (KIE.L) said on Friday it would meet its expectations for the full year on the back of a strong second half, suggesting that it was able to shrug off a hit to the construction sector from Britain’s imminent exit from the European Union.
Britain’s economy has slowed since the Brexit vote in June 2016 and growth in construction activity slowed in August after reaching a two-year high the month before.
The construction industry relies heavily on labour from the EU, with more than a quarter of London’s construction workers coming from elsewhere in the EU, according to figures in June from the Office for National Statistics.
However, Kier, which also has business in Australia, New Zealand and the Middle East, warned on higher expenses related to its cost-cutting initiative.
The company said the expenses that it would incur to execute its cost-savings plan launched in July, which includes sale of non-core assets, would exceed savings by about 10 million pounds ($12.79 million) in the first half. bit.ly/2QNa6Ue
“(The cost savings program) is still expected to wash its face from an earnings and cash perspective in FY 2019,” Liberum analysts said in a note.
Kier said its order books and development pipelines “remain strong”, building on a higher-than-expected rise in annual profit reported in September.
Peel Hunt analyst Andrew Nussey called the update a “confident statement” that confirmed trading in line with the usual bias in the second half.
Analysts on average expect Kier to report a pre-tax profit of 154.1 million pounds ($197.11 million) for the full year, according to Refinitiv data.
($1 = 0.7818 pounds)
Reporting by Pushkala Aripaka and Noor Zainab Hussain in Bengaluru; Editing by Sunil Nair and Saumyadeb Chakrabarty