Kier celebrates profit and cash hikes

Kier has reported a sharp increase in profit and cash.

The company made a £51.9m pre-tax profit in the year to 30 June 2023, a 226 per cent increase on the £15.9m made the year before. Its adjusted profit before tax stood at £104.8m – this is the group’s profit before losses due to amortisation and one-off charges such as cladding costs and a fine from the Health and Safety Executive.

Its net cash, meanwhile, increased by 2,110 per cent from £2.9m to £64.1m, while the group’s turnover increased by 7.5 per cent to £3.38bn.

Kier therefore had a statutory profit margin of 1.65 per cent for 2023/23 – although this figure rises to a 3.9 per cent adjusted profit margin, which is above the 3.5 per cent adjusted profit margin that the group aims for.

Kier’s revenue growth was driven by its Infrastructure Services and Construction divisions, which turned over £1.71bn and £1.65bn respectively. The divisions made pre-tax profits of £58.6m and £42.1m respectively.

Kier’s property business saw turnover drop by around three-quarters, from £144.1m to £37.6m, amid challenging property market conditions – although profit only fell by £1.4m, to £13.7m. The group’s corporate segment made a book loss of £67.1m

Kier chief executive Andrew Davies said: “The group has achieved considerable operational and financial progress over the last two years.

“This is reflected in the significantly improved financial performance of the group over the last year. It is testament to the hard work and commitment of our people, who have enhanced our resilience and strengthened our financial position in line with the objectives set out in our medium-term value creation plan.

“Our order book remains strong at £10.1bn and provides us with good, multi-year revenue visibility. The contracts within our order book reflect the bidding discipline and risk management now embedded in the business. I am also particularly pleased to report that the group significantly improved its year-end net cash position and has confidence in sustaining this momentum going forward.”

He added: “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 this year. This, combined with our focus on operational delivery, gives the group a clear line of sight to significantly de-lever.”

Last week Kier bought Buckingham’s 180-person rail division out of administration for up to £9.6m. Kier said the purchase will not affect its net cash forecasts, but will add between £50m and £75m of turnover.

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