Kier confident in future as it ends year in line

Infrastructure services, buildings and developments company Kier Group updated the market on its trading following the end of its financial year on 30 June on Tuesday, reporting that underlying profit and earnings were forecast to be in line with expectations.

The FTSE 250 firm said year-end net debt was expected to be between £170m and £190m as forecast, with average month-end net debt of around £375m, which the board said reflected reduced volumes due to bad weather affecting the construction business over the winter.

Construction volumes had since returned to levels in line with management's expectations, Kier said.

It also reported increased construction and services order books of more than £10bn, providing a 90% secured revenue position in those businesses for the 2019 financial year.

In the highways sector, three-year extensions were secured to the company’s Highways England contracts for Areas 3 and 9, with aggregate total annualised revenues of around £250m.

“Following the repositioning of the group to focus on three key market positions - infrastructure services, buildings, and developments and housing, in June the group launched a new efficiency and streamlining programme, entitled 'Future Proofing Kier',” the board said in its statement.

“Facilitated by significant investment in new systems over the past two years, this programme will improve productivity, include the disposal of non-core operations and deliver an improvement in operating margins and cash generation.

“It is anticipated that material benefits will be realised in the financial year ending 30 June 2020 and beyond.”

Kier said further details about the 'Future Proofing Kier' programme would be announced in due course, and at its full year results in September.

Looking ahead, Kier said the group's core businesses operated in three growing UK markets, each of which was underpinned by “robust” macroeconomic and demographic fundamentals.

“The group is focused on continuing to improve its performance and reducing its average net debt.

“The strength of the construction and services order books, together with the long-term property and residential pipelines, provides a robust platform to deliver our Vision 2020 targets.”

Kier said it would release its full year results on 20 September.