Kier Group reports in line trading in second half

Kier Group said on Thursday its full year results are expected to be “second-half weighted" in line with the previous year.

In a trading update for the company's second half, covering the six months ended 31 December, the FTSE 250-listed company reported its underlying trading was in line with management’s expectations and each division continued to “perform well”.

The Property division was supported by investment in new schemes with a pipeline of more than £1bn. The business continued to deliver return on capital employed in excess of 15%. “The period was underpinned by strong occupier activity and healthy investment sentiment across all sectors,” Kier said.

The Residential unit was boosted by demand in the UK for housing. The business secured a £42m four-year allocation from the Homes and Communities Agency in January, which Kier said will underpin the delivery of completions from 2019. The division is on track to deliver more than 2,200 completions by 30 June 2017, Kier said.

The Construction and Services divisions also achieved a strong performance as Kier continued with its Caribbean operations. Total contract awards since mid-November 2016 totalled £1bn.

The order books of the business represent 100% of the estimated revenue for the 2017 financial year.

The group's net debt position for the second half was £179m, up from £174m the same period a year earlier, including receipt of the proceeds from the disposal of Mouchel Consulting and an investment of £100m since 1 July 2016 in the Property and Residential divisions.

Kier said it expects to maintain a net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) ratio of less than 1x at 30 June 2017.

The company added that it continues to experience “good underlying organic growth”.

“The strength of the Property pipeline, the good forward sold position in the Residential division and the combined Construction and Services order book, which has been maintained at approximately £9bn excluding potential further renewals and extensions valued in excess of £2.5bn, positions the group well for the future.”

Shares rose 0.66% to 1,352.84p at 0905 GMT.