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Troubled construction and services firm Kier has said it will cut 1,200 jobs as it seeks to make cost savings of £55m a year by 2021.

The cuts came as the firm's boss announced a plan to simplify Kier's business and reduce its debt.

The company will sell its homebuilding business, Kier Living, and will shut or sell other interests, including its recycling and rubbish processing units.

Kier will now focus on activities such as construction and road maintenance.

Shares in the company have fallen by more than 85% in the past year, and they fell a further 9% in early trading on Monday, to about 119p.

"These actions are focused on resetting the operational structure of Kier, simplifying the portfolio, and emphasising cash generation in order to structurally reduce debt," said chief executive Andrew Davies, who took over the role in April this year.

"By making these changes, we will reinforce the foundations from which our core activities can flourish in the future, to the benefit of all of our stakeholders."

The company's woes are having ramifications beyond the construction world. The share price fall has affected its largest investor, Woodford Investment Management, which had to suspend its flagship fund after some of its investments lost value and investors withdrew their cash.

Profit warning

Of the 1,200 jobs being lost, Kier said 650 of the posts would have gone by the end of this month, while the remaining 550 jobs are expected to go next year.

The company added that several potential suitors had already expressed an interest in its Kier Living business.

Two weeks ago, shares in Kier tumbled more than 22% after the company issued a profit warning.

At the time it said underlying profit would be about £25m below previous expectations. It blamed higher costs and problems at units in its road, utilities and housing maintenance businesses.