Kier to resume dividend payments as it trades in line
Kier Group
148.40p
12:44 31/12/24
Infrastructure services, construction, and property company Kier Group said in an update on Thursday that, during the first half of its financial year, its performance remained consistent with the board's expectations, building on its positive trajectory from the previous period.
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The London-listed firm put the performance down to robust volume growth, particularly in the construction sector.
As in previous years, the board said it anticipated a second-half weighted performance.
On 4 September, Kier successfully acquired the rail assets of Buckingham Group Contracting - a move that it said had been effectively integrated into its transportation business.
As of 31 December, Kier's order book stood at £10.7bn, marking a 6% increase compared to both the year-end position in June of £10.1bn, and the same date in 2022, which was also £10.1bn.
The company said it had secured 92% of its revenue for the 2024 financial year, offering a high degree of visibility.
Long-term framework positions were not included in the order book, and presented additional opportunities.
Recent awards included a £30m contract in the natural resources, nuclear and networks sector for the Gas to the West project in Northern Ireland, as well as multiple education projects totalling £150m, a healthcare project worth around £60m, and the contract for a new house block at HMP Elmley valued at over £100m.
Kier Group said its emphasis on operational efficiency and cash management, coupled with the positive cash flow generated by substantial volume growth, led to a significant reduction in average month-end net debt.
It currently stood at £140m, a marked improvement compared to £243m in the same period a year earlier.
The company said it expected to report a modest net cash position as of 31 December, a notable turnaround from the £131m net debt recorded in the first half of the 2023 financial year.
Kier said its strong trading performance, secure order book and improved balance sheet instilled confidence in the board to reinstate dividend payments in the current financial year.
The resumption was set to start with an interim dividend coinciding with the release of its half-year results.
“Kier has made a good start to the year, in line with our expectations,” said chief executive officer Andrew Davies.
“I am particularly pleased with the progress we are making on reducing debt, which has resulted in the group materially deleveraging its balance sheet in the first half.”
Davies said the firm had achieved its performance through disciplined growth as well as a focus on operational excellence, cash management and cash generation.
“Kier remains well positioned to continue benefiting from UK government infrastructure spending commitments and this gives the board every confidence in delivering our medium-term value creation plan.”
At 1232 GMT, shares in Kier Group were up 6.95% at 120p.
Reporting by Josh White for Sharecast.com.