Strong revenue and profit growth puts Kier on firm footing
Construction & Build
Strong revenue growth at both Kier’s construction and infrastructure divisions drove growth in profits and halved average month-end debt in the year to June 2024.
Andrew Davies says core business is well-placed to benefit from UK Government and regulated industry spending commitments.
The strong performance at the contractor saw revenue including joint ventures recover to £4bn again, up 17% from the prior year. This uplift as margin remained stable at 3.8% powered pre-tax profit forward nearly a third to £68m.
Kier’s order book continued to grow and increased 7% year over the year to £10.8bn. Around 60% of Kier’s order book is now under target cost or cost reimbursable contracts.
A strong seasonal inflow of cash mainly from construction saw year-end cash more than double to £167m. Average net debt halved to £116m from £232m in the prior year.
Andrew Davies, Chief Executive, said the years of streamlining and cost-cutting were now behind the business.
He said: “The past three years have seen the group achieve significant operational and financial progress.
“The contracts within our order book reflect the bidding discipline and risk management now embedded in the business.”
Both infrastructure services and construction delivered strong growth with property now expected to benefit from a stronger flow of investment going forward.
Kier divisional trading to June 2024 | |||||
|---|---|---|---|---|---|
| Op. Profit | Change | Turnover | Change | Margin |
Infra. services | £89m | 55% | £2.bn | 16% | 5.6% |
Construction | £60m | 28% | £1.9bn | 15% | 3.6% |
Property | £1.9m | -87% | £71m | 89% | 8.7% |
Davies said: “The success for future years is underpinned by the year-end order book, resulting from a large number of contract wins across Infrastructure Services and Construction, providing multi-year revenue visibility.
“The new wins consist of high quality and profitable work in our markets reflecting the bidding discipline and risk management embedded in the business.”
Benefiting from the order book strength and Kier’s framework positioning, around 90% of group revenue for this coming year is already secured which provides the board with a high degree of confidence in our outlook.
Davies added: “The group has started the financial year well and is trading in-line with the board’s expectations.
“The group is well positioned to continue benefiting from UK Government infrastructure spending commitments and we are confident in sustaining the strong cash generation evidenced especially over the last two years allowing us to significantly deleverage, increase dividends to shareholders and deliver the evolved long-term sustainable growth plan which will benefit all stakeholders.”
Written by Aaron Morby at Construction Enquirer