Kier H1 profit rises, sees double-digit profit growth in 2018

FTSE 250 construction and services group Kier reported a rise in first-half profit on Thursday as it sounded an upbeat note on the outlook for 2018.

In the six months to the end of December 2017, pre-tax profit was up 4% to £48.8m on revenue of £2.2bn, up 8% on 2016, while operating profit increased 5% to £60m. Basic earnings per share rose 3% to 41p and the company declared an interim dividend of 23p per share, up 2% from the previous year.

Kier said it saw particularly strong contributions for the property and services division, while the McNicholas business was performing well following its acquisition in July last year.

In the construction division, revenue was down 7%, mainly due to delays in the commencement of certain projects to the second half of the financial year. However, the services division saw revenues rise 17%, underpinned by the highways business and the better-than-expected contribution in the first half from McNicholas, which includes the disposal of its plant business.

In the property division, meanwhile, revenues rose a whopping 200% as it remains focused on predominantly non-speculative, pre-let development, utilising joint ventures allowing it to deliver its pipeline without requiring additional funding.

Chief executive Haydn Mursell said: "The group is performing well. Our £9.5bn construction and services order book, combined with our £3.5bn pipeline in the property and residential divisions, provides good visibility of work over the medium term.

"The group's performance reflects the strength of our business model and our financial and operational disciplines. Our portfolio of businesses provides balance and resilience and our approach to risk management is evident in the margin performance we have delivered over many years. We remain on course to deliver double-digit profit growth in 2018 and to achieve our Vision 2020 strategic targets."

At 0811 GMT, Kier shares were up 0.9% to 1,088p.