Kier keeps on track for double-digit growth

Construction and maintenance group Kier made a smooth start to the year and said it is confident of delivering double-digit profit growth, with even stronger visibility on revenues.

Average net debt increased and cash conversion remained strong in the four and a half months since 28 June, in line with management expectations and a target of keeping net debt no bigger than EBITDA.

The performance of the construction division was said to be underpinned by the regional building business, with margins in line with expectations.

Kier recently won the maximum number of places on the government's £8bn four-year education construction framework, continuing its strong presence in the sector.

The current construction order book represents more than 95% of the division's targeted revenue for the financial year, up from 90% at the time of full year results in September.

Also performing well was the property division, delivering a return on capital in excess of 20% on an increasing capital base.

"During the period, we continued to invest in new development sites and experienced strong co-investor support, all of which contributed to the development pipeline remaining in excess of £1.4bn," the company said.

ROCE has also increased at the mixed tenure and private housebuilding businesses, benefiting from the recycling of capital from the private land bank into the mixed tenure business and the increasing use of joint ventures.

"Private sales and pricing remain strong and demand for mixed tenure housing continues, further assisted by recent Government initiatives including the extension of the Help to Buy scheme."

Boosted by the acquisition of McNicholas Services in the period, the services division is now one of the top three providers in the UK utilities sector and has kept margins stable and has a current order book representing more than 95% of its targeted revenue for this financial year, also up from 90% in September.

A seven-year, £147m highways maintenance contract was won with Shropshire County Council.

"Our Highways England programme of works remains on track following the publication of the Highways England road improvement programme. Moving forward, we believe that we are well placed to benefit from new opportunities arising in the UK highways market," Kier said.

Following its acquisition, the McNicholas business is performing well and "good progress" was reported on integration.