Construction group Kier, building the £67 million Snow Hill development for Ballymore in Birmingham, has said it expects pretax profit for the year to the end of June to be in line with expectations barring further significant market setbacks for its residential business.
The company said whilst there was little evidence of the credit crunch affecting construction and support services, it was clearly having an effect on homes and property divisions.
It noted since February conditions had deteriorated further in both sectors. This was reflected in a 35 per cent fall in reservation levels in the period compared with last year. This had lead the firm to reduce sales expectations for the year to June 30.
However, it added profits arising from these operations continued to form a progressively smaller proportion of pretax profit.
Despite the housing situation, it added there was "limited evidence" of a slowdown in the markets for construction and support services, both of which continued to perform strongly and have record order books.
"These mixed market experiences reinforce the benefit of having a spread of businesses which are not solely reliant upon one sector of the market," it said in its interim statement.
The construction division has been boosted by the group's recent appointment by BAA as one of five framework contractors to deliver £650 million of improvements to various UK airports over the next five years.
It said it had also seen a strong flow of work in the education sector both on framework agreements and through traditional methods of procurement.
Kier Construction, its infrastructure business, is also poised to benefit from increasing expenditure on power and utilities in the UK, while it has recently secured significant contracts in Dubai.
The group’s mining business has also won orders for delivery in 2009 at prices significantly in excess of budget, it added.
In support services the group has recently secured a £400 million contract to repair and modernise 20,000 council homes in Stoke on Trent over the next ten years. On top of that win it predicted a strong bidding pipeline in the sector.
It added it continued to review and adjust its cost base in line with the reduced level of trading.
"Barring any further significant market setbacks for our residential business overall profit before tax for this year is anticipated to be in line with expectations, our balance sheet is strong and our cash balances remain high," the group said.
The firm joins a chorus of builders, including Persimmon, Redrow and Barratt, which have warned that the housing market is slowing sharply as mortgage costs rise due to the global credit crunch.