Kier shares up as profit rises and pauses new development investments

Kier Group PLC on Tuesday reported increased earnings and forecast future results at the top end of guidance, as well as setting out "clear strategic priorities" to strengthen the business going forward.

Shares in Kier were up 4.2% at 258.40 pence on Tuesday in London.

The Salford, England-based infrastructure services, construction and property group reported statutory revenue of £4.35 billion for the financial year ended June 30, up 6.8% from £4.08 billion the prior year. Adjusted revenue, which includes Kier's share from joint ventures, grew 7.5% to £4.39 billion from £4.09 billion.

Pretax profit rose 7.3% to £83.8 million from £78.1 million, with basic earnings per share up 10% to 14.1p from 12.8p. Operating profit rose 4.4% to £118.7 million from £113.7 million.

On an adjusted basis, pretax profit climbed 8.8% to £136.4 million from £125.4 million, operating profit rose 6.7% to £169.8 million from £159.1 million, and basic EPS grew 8.8% to 23.5p from 21.6p. The adjusted profits are before adjusting items and amortisation of acquired intangible assets.

Kier declared a full-year dividend of 7.8p per share, up 8.3% from 7.2p. This includes a final dividend of 5.2p.

"I am pleased to report that Kier has delivered another year of strong performance, achieving excellent revenue and profit growth...During my first year as [chief executive], we have taken important steps to strengthen and simplify the business, enhance the capability of our leadership team and align the group even more closely with the significant growth opportunities ahead," commented Chief Executive Stuart Togwell.

Alongside the annual results, Kier laid out plans for the "next phase of [its] development". Its main strategic priorities, it said, involve focusing on its core Infrastructure and Construction businesses; strengthening its balance sheet, including aiming for over £200 million in average net cash by financial 2029; and enhancing earnings quality to target double-digit adjusted EPS growth.

Kier said that in line with these priorities, from the current financial year onwards it will make no new investments in Property developments, using the capital instead to enhance the strength of its balance sheet.

"This process will be managed in a controlled way to balance timing and value, with capital to be realised in line with existing development schedules," Kier said.

Kier said it has updated its medium-term targets, which now include mid-single digit revenue growth and double-digit growth in adjusted EPS.

"We enter FY27 with strong foundations and clear strategic priorities, to make the most of the sizeable opportunity in front of us," Togwell said. "In particular, we bring good momentum into the new financial year, with recent significant contract and framework awards, strong order book growth and an expanding pipeline.

"This gives us confidence, looking at FY27, that earnings will be at the top end of the board's prior expectations."

Kier's order book stood at £11.9 billion as of June 30, representing 8.2% growth compared to £11.0 billion a year prior. It also was up from £11.6 billion on December 31. This means that 95% of financial 2027 revenue and 70% of financial 2028 is covered, Kier said.

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