Kier reinstates dividend after strong profit growth

Both construction and infrastructure divisions grew strongly in the six months to the end of December, with infrastructure driving the group’s profit improvement.

Andrew Davies, chief executive, said: “The past two and a half years have seen the group achieve significant operational and financial progress and I am delighted that today marks a return to paying dividends.

“The first half has seen the group deliver strong volume and profit growth, increased orders and material deleveraging. ”

He added that the positive outlook for Kier was underpinned by the year-end order book growing to £10.7bn, an increase of 6% against the prior year.

This reflected a large number of contract wins across infrastructure services and construction.

Overall Kier saw revenue jump by almost a quarter to £1.9bn with reported profit from operations up 15% to £44m.

The big improvement saw the firm slash average month-end net debt to £136m from £242m in the same prior period.

Kier trading divisions half-year

Revenue
Change
Op profit
change
margin

Infrastructure services
£944m
16%
£32m
47%
4.7%

Construction
£915m
29%
£25m
-2%
3.6%

Property
£22m
105%
£4.6m
5%
n/a

Davies said Kier had successfully overcome last year’s cost inflation through having 60% of its order book under target cost or cost reimbursable contracts as well as through procurement strategies and negotiations on fixed price contracts.

Group-wide margin slipped to 3.4% (HY:23: 3.7%) due to the growth in volumes of the lower margin construction business.

Davies said: “The second half of the financial year has started well, and we are trading in-line with 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 achieved over the last 18 months, allowing us to continue to significantly deleverage the group.”

Kier declared an interim dividend of 1.67p per share.