In an end-of-year trading update this morning, Kier said it had turned around the business, supported by £350m from its capital raise and sale of Kier Living.
The improvement after several years of losses and rising debt also came from numerous cost savings realised in responding to the reduced volumes caused by Covid.
Andrew Davies, chief executive, said the group expects to deliver a full-year 2021 adjusted operating profit margin of 3%, just below its medium-term target of 3.5%.
He said: “The group’s proven track record of delivery and focus on selected markets, coupled with its strong order book and strengthened balance sheet, gives the board confidence in our strategy and the continued success of the group.”
Davies added that Kier continued to win new business in its markets on terms and at rates, which reflect the bidding discipline and risk management introduced under its Performance Excellence programme.
Recent contract awards
- Highways – £190m Area 3 Maintenance and Response contract by Highways England
- Infrastructure – £50m early works contract for HS2 Phase 2a
- Utilities – Openreach contract to construct new broadband infrastructure in West and South of England and Scotland
- Ministry of Justice’s £1bn New Prisons Programme
- Kier Places – £75m capital works contract by Hammersmith and Fulham council
With cash generation continuing to be strong, Kier said its net debt/cash position at the year-end would be better than the board’s previous expectations.
Although average month-end net debt for the year remained at a level similar to previously due to receipt of the £350m capital raise and Kier Living sale proceeds arriving in the final months of the year.