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* Kier warns on 2019 operating profits, mounting debt
* Share price down 40%, hits lowest since 1999
* Fears over possible financing, dividend cut
* Flags more costs from strategic review (Adds investor comments on share move, debt, need of financing, credit score)
June 3 (Reuters) - Construction and services group Kier's shares fell 40% to their lowest level in two decades on Monday after a profit warning from the British firm, whose mounting debts also fueled fears of a dividend cut and another funding-raising.
Kier, whose stock has lost about 84% of its value over the last year, blamed higher costs and persistent pressure on its highways, utilities and housing maintenance businesses.
Several big British building firms have suffered since regulators tightened rules for private companies operating in the public sector after last year's collapse of government contractor Carillion and Interserve's administration in March.
Kier is undergoing a review to cut debt and simplify its structure under Chief Executive Andrew Davies, who took charge in April after the company failed last December to convince shareholders to back a rights issue at 409 pence per share.
It eventually raised 250 million pounds when banks mopped up the shares on offer.
Shares in Kier, which has contracts for major projects including London's Crossrail link, were down 40% to 167 pence by 1340 GMT, their lowest since February 1999, after it warned that 2019 operating profit would be about 25 million pounds ($51 million) lower than a consensus estimate of 169 million pounds.
The company, which had aimed to pay off this year all of the 180.5 million pounds in debt it reported at the end of 2018, said it would likely still be in debt by the end of the year. In March, Kier disclosed an accounting error that pushed up its 2018 debt by 50 million pounds.
Fears about Kier's debt and the potential need for it to raise new funding added to pressure on its shares, investors and analysts said, adding that the company would need to cut costs.
"It would surprise me if they didn't at least trim their dividend," said Paul Mumford, portfolio manager at Cavendish Asset Management, who holds a small stake in Kier.
Kier has already cut its interim dividend payout for the six months to December 2018 to 4.9 pence per share, down from the 23 pence it paid in the comparable period a year earlier.
"It's a much better situation than something like Carillion, but on the other hand it's a little bit worrying when you get so many profit warnings coming along," Mumford added.
Kier flagged higher-than-expected costs of 15 million pounds from its restructuring, saying these reflected "an acceleration of the program" since the appointment of Davies and adding that the review's conclusions will be announced on July 30.
Revenue growth at Kier's buildings unit would also be lower than previously forecast, the company said, adding it now expected revenue in the 2019 financial year to be flat compared to 2018, when it reported sales of 4.5 billion pounds.
Liberum analysts said they expected a roughly 250 million pound fall in revenues, with weaker volumes in the utilities business, a weakness in winning maintenance work and slower growth than expected in the buildings unit.
"From a recovery point of view if there's decisive action, and maybe fairly ruthless action, to get the thing back on an even keel, then that would be a way the share price may recover," said Mumford.
"You could argue (Davies) is the man to do it because he's already come out with some pretty drastic measures."
Analysts at Liberum and Peel Hunt assumed a near 75 million pound swing from net cash to debt to their current estimates.
Kier's combined credit score - which measures how likely a company is to default in the next year on a scale of 100 (very unlikely) to 1 (highly likely) - was 5 before Monday's announcement, Refinitiv Eikon data showed. ($1 = 0.7908 pounds)
(Reporting by Justin George Varghese and Helen Reid; Editing by Keith Weir, Edmund Blair and Alexander Smith)