Kier Group, the construction, housebuilding and services group, reassured investors that it would meet full-year profit expectations this morning, despite the mounting woes afflicting the property market.

The company, which this month announced 350 job cuts in its residential division, said it continued to see "little evidence of a slowdown in the markets for construction and support services, both of which continue to perform strongly and have record order books".

The shares, which have fallen by almost 60 per cent over the past 12 months, rose by 35p to 945.5p, up almost 4 per cent.

Kier, which was involved in the construction of the Channel Tunnnel rail link, said the mixed fortunes experienced by various parts of the company reinforced the benefit of having a range of businesses operating in different sectors of the market.

In a trading update covering the year to the end of the June, Kier said that the level of tender awards in construction had been "very high" and its strong order books reflected continued demand from both public and private sector clients.

It said the division continued to generate strong cashflows, contributing to a year-end net cash balance for the group of more than £140 million, not far short of the £148 miilion balance this time last year.

Support services remained in growth thanks mainly to its building maintenance arm, which services about 220,000 public sector homes throught Britain. It won several new contracts and was one of the final two bidders for a £40 million-a-year coontract in North Tyneside.

There was a very different story from its housing division, however, as unit sales fell by 19 per cent to 1,438 legal completions and visitor levels, reservations and contract exchanges all fell sharply.

It said that its order book of exchanged contracts and reservations was 45 per cent lower than a year ago.

Kier has responded by announcing the closure of four of the division's five offices and cutting staff numbers by 60 per cent to 250. it has also stopped using part-exchange deals as a selling tool.

It said that in the final quarter, expenditure on land had been limited to settling creditors, exercising options and making committed payments. It added: "We will continue this approach until the outlook for the housing market becomes clearer."

It warned investors that, in the light of market conditions, it would continue to review the carrying value of land and projects.

It said that yields in its property division had continued to rise and occupier demand had slowed. However, it had achieved all its expected development sales.

It added: "We will run a smaller, leaner operation in the future with our focus shifting towards affordable housing and regeneration."

The company said that, excluding exceptionals, it expected to report pre-tax profits ahead of last year.

David Phillips, an analyst at Landsbanki, left his pre-tax profit estimate unchanged at £86.1 million, compared to the £77.6 million achieved last year.

"Given the ongoing deterioration in the residential housing and commercial property markets, we think this is represents an extremely creditable outcome and demonstrates the strength of Kier's balanced, cash-rich business model," he said.

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