Kier raises operating margin to 3.7%

Aaron Morby 2 years ago

Kier has kept its planned operational transformation on track and delivered an adjusted operating margin of 3.7% across the business.

Kier chief reports £40m of continued restructuring costs buy says underlying business is performing strongly
Kier chief reports £40m of continued restructuring costs buy says underlying business is performing strongly

Reporting improved results for the year to June 2022 this morning, Kier said a period of strong work winning had seen the forward order book swell 27% to £9.8bn, reflecting a large number of contract wins across all divisions.

Andrew Davies, chief executive, said much of this order intake was buttressed from inflationary headwinds with around 60% for target reimbursable or cost reimbursable contracts.

The construction business average order size stands at £13m reducing exposure with regular re-pricing of contracts.

But Kier’s reported pre-tax profit continued to be impacted by restructuring and other costs, which ran to £56m over the year.

This included £22m in extra costs relating to five remaining projects at the firm’s southern construction business, which are due to complete this year.

A further £6.7m in additional cost stemmed from redundancies under the present cost-saving programme and re-sizing the international business.

Some £7.5m and £4.2m was booked against professional adviser fees and property write-downs, respectively.

Other costs of £18m, include £7.8m of fire compliance and cladding claims that have arisen during the year.

The construction division struggled most over the year with operating profit nearly halved at £23m.

The raft of extra costs saw actual reported group pre-tax profit creep up to £16m, improved from £5.6m previously.

Revenue was marginally down at £3.26bn, dampened by an expected fall in construction activity.

Kier division trading
Op. Profit 22: 21 Revenue 22: 21 Ad. op margin
Infrastructure £48m £41m £1.67bn £1.42bn 7%
Construction £23m £41m £1.44bn £1.77bn 4.2%
Property £17m £2.3m £144m £134m 12%

But Davies said that the underlying business was performing strongly following the recent prolonged restructuring.

Over the year, adjusted operating profit jumped 20% to £120m with adjusted operating margin hitting 3.7% across the group.

Kier’s now strong order book amounted to 85% of this year’s revenue target.

Davies said: “Over the last two years Kier has undergone a transformation, rationalisation and recapitalisation and the group is delivering against its medium-term value creation plan.

“The performance over the last 12 months reflects our significantly enhanced resilience and strengthened financial position.

“The group is well positioned to continue benefiting from UK Government infrastructure spending commitments and we have a significantly increased order book of £9.8bn which gives us certainty against the market backdrop.

“The new financial year has started well and we are trading in line with our expectations, despite continued inflationary pressure and see no change in the current market outlook.

“We remain focused on the delivery of a sustainable net cash position and sustainable dividend policy, in-line with our medium-term value creation plan.”

Proceeds from the sale house building business Kier Living saw average month-end net debt for the year reduce to £216m from £432m a year before.

The speed in the reduction of debt was impacted by a £29m repayment of Kier’s supply chain finance facility and £21m repayment of its deferred HMRC obligations agreed during the pandemic.

Latest news

Lendlease veteran is latest new McAlpine director

Paul Sims joins as Operations Director after 40 years at rival contractor
7 mins ago

BAM gets go-ahead for Leeds 200,000 sq ft office

Latitude Yellow will complete final plot at Doncaster Monk Bridge site
60 mins ago

VolkerFitzpatrick wins £30m logistics job

Latest deal to build five distribution units for Prologis UK
41 mins ago

Precast firm FP McCann cleared after immigration raid

Home Office takes no action after public raid on construction site
8 hours ago

Wates-owned SES restructure delivers record profit and revenue

Building services contractor revenue soars to almost £300m
7 hours ago

25 groundworks firms win £100m Places for People deal

M&J Evans, Carmac and Churngold Construction feature in housing association's line-up
8 hours ago

Energy efficiency firms angry at lack of CITB support

SME contractors funding bid "does not meet the current criteria for supporting productivity or EDI"
8 hours ago

£400m South Cambridge science park approved

Outline approval allows former sewage treatment works to be demolished
8 hours ago

McLaren gets green light for 45-storey Leeds tower

Landmark Wellington Square scheme will see 464 flats built with 360,000 sq ft of offices
3 days ago

Heavy rain causes 1.9% construction output fall

Hopes remain undampened of a resi-led recovery this summer
3 days ago

Taziker restruture to return to profitability after £1.2m loss

Founders bought the business back from private equity after last year's loss
3 days ago

£220m London wharf homes scheme approved

285 homes to be built beside protected Albert and Swedish Wharves in Wandsworth
3 days ago

Major project veteran named civils director for Sizewell C

David Speight previously worked on Hinkley, Heathrow and HS2 client teams
3 days ago

Morgan Sindall lands £19m Milton Keynes hospital job

Crane lifts to be carefully co-ordinated to ensure air ambulance remains active
4 days ago

Clancy bolsters civils leadership team

Daniel Tonkin and Simon Hyams join as operation directors of water and infrastructure
4 days ago

Balfour names new project boss for HS2’s super-hub station

Steve O’Sullivan replaces Nigel Russell who was promoted to CEO of Balfour's HS2 ops
4 days ago

Buckingham Group supply chain hit doubles to £256m

Total owed to unsecured creditors soars as surety providers finalise claims
4 days ago

Builders demand an end to police plant bans

Call to suspend all embargoes on moving mobile cranes and large site kit
4 days ago

Green light for £65m Blackpool multiversity campus

Education campus of 350,000 sq ft will be delivered in phases
4 days ago

Vinci signs £138m Sheffield steel forge expansion deal

Sheffield Forgemasters signs landmark contract after two years of pre-construction works
5 days ago

McAlpine hires HS2 programme boss to head defence arm

Armed forces logistics expert Mike Hickson takes role as MD of defence
5 days ago

£200m carbon capture plan for Deeside site

Energy from waste operator enfinium looking to invest in North Wales plant
4 days ago

McAleer & Rushe promotes five staff to contracts directors

Design and build contractor targets £500m revenue next year
5 days ago

Consultant quartet win Government estate upgrade deal

Government Property Agency selects Arcadis, Tetra Tech, AtkinsRéalis and McBains
5 days ago

Resi towers pioneer to transform Liverpool site

Beetham founder Hugh Frost to help develop 1,200 new homes
6 days ago

Construction Manager of the Year crowned

Galliford Try's Barry Kingscote wins coveted prize: Full list of winners
6 days ago

Landsec £250m London terraced office job approved

Skanska tipped for 20-storey Hill House scheme near Fleet Street
6 days ago

Lendlease tops March contracts league

BAM and ISG rank third with big contract wins
5 days ago

Vistry strikes deal with Homes England for 1,000 units

Firm's timber frames factory will supply most of the Midlands houses
5 days ago

Morgan Sindall go-ahead to build 23-storey Salford resi job

Funding deal with CBRE allows latest project on bank of River Irwell to proceed
6 days ago

Contractor services