Kier cheers 9% profit jump as Carillion collapse sends order book to record high
Annual pre-tax profits climbed to £137 million.
Construction group Kier has cheered a 9% jump in annual profits and a record-level order book following Carillion’s collapse.
The company said on Thursday that its pre-tax profits had climbed from £126 million to £137 million in the year to June 30.
Revenues for the year also grew by around 5% to £4.5 billion.
That was despite “significant turbulence” across its markets.
The sector was rattled earlier this year by the collapse of outsourcing and construction giant Carillion.
But Carillion’s demise was ultimately a boon for Kier, which has since seen its construction order book reach record levels of £5 billion.
“The current order book of £5.0 billion is at a record level for secured and probable work and benefited from the inclusion of the additional share of the Smart Motorway and HS2 joint ventures, following the liquidation of Carillion,” Kier said.
“The order book represents more than 90% of forecast revenue for full-year 2019 on increasing volumes.”
When accounting also for services, Kier’s total order book also hit all-time highs of £10.2 billion.
Kier Group shares were up 4% in morning trading.
The company has since launched a turnaround programme aimed at ramping up efficiency and improving profitability.
Kier hopes it will translate into higher annual profits and free cash flow boost of at least £20 million in full year 2020.
It is also aiming to dispose of around £30 million to £50 million worth of non-core assets.
I am pleased to report a good set of results with all divisions performing well Chief executive Haydn Mursell
Chief executive Haydn Mursell said: “I am pleased to report a good set of results with all divisions performing well.
“We have launched the Future Proofing Kier programme which will streamline the business, thereby enabling us to deliver a more efficient service to clients, respond to changes in our markets and capitalise on growth opportunities, whilst, importantly, also accelerating the reduction of the group’s net debt position.
“Our strong market-leading positions, our record £10.2 billion construction and services order books, and our £3.5 billion property development and residential pipelines, will see the group deliver on its Vision 2020 targets.”
Property revenue for the year to June increased around 20% to £218 million, resulting in underlying operating profits of £34 million.