Kier suffers £86m hit on Hong Kong and Caribbean exit

Aaron Morby 6 months ago

Kier suffered a £86m hit on closing its Caribbean and Hong Kong businesses denting pre-tax profits for the year.

Despite underlying growth in construction the firm revealed that exiting its two Mass Transit Railway contracts in Hong Kong and practical completion of its Caribbean project had reduced group profit to £26m in the year to June.

The one-off streamlining costs follow a £151m charge in 2016, which pushed the Kier into the red.

Haydn Mursell, chief executive, said that the group had now substantially concluded its two-year portfolio simplification programme and returned to profit.

He added that underlying group performance for the year was good with pre-tax profit before exceptional charges up 8% to £126m.

Group revenue also edged up 5% to £4.3bn as construction activity in the UK improved.

“Having simplified our portfolio, the group is more focused and able to pursue its growth ambitions in our three core markets; building, infrastructure and housing, which now represent 90% of the group’s revenue and profit.

“We continue to invest in the business to improve our operational efficiency, providing a robust platform on which to take advantage of the strong long-term fundamentals in these core markets.”

The construction division delivered a strong result with a record £3bn of new contracts awarded in the year.

Revenue rose 6% to £2bn with an underlying operating profit increase of 2% to £40m.

Mursell said underlying operating margins were maintained around 2%.

The current order book of £4.2bn for secured and probable work represents more than 90% of forecast revenue for the 2018 financial year, on increasing volumes.

Kier divisions trading
Op profit 2017 Op profit 2016 Revenue 2017 Revenue 2016 Margin
Construction £40m £39m £2bn £1.9bn 2%
Residential £23m £20m £376m £353m 6.1%
Services £87m £86m £1.7bn £1.7bn 5.2%
Property £26m £21m £182m £169m N/A

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