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Kier FY profit beats on strong order book

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By Reuters

(Reuters) – Construction and services company Kier Group <KIE.L> said on Thursday a hefty order book lifted its underlying full-year pretax profit 9 percent, which was higher than expected.

Underlying pretax profit rose to 137 million pounds in the year to June, from 126 million pounds a year earlier, said Kier, which works in sectors including defence, housing and mining in the UK, Australia, New Zealand and the Middle East.

Analysts expected underlying pretax profit of 130.01 million pounds, according to Thomson Reuters I/B/E/S.

Kier, which launched a cost-savings plan in July including the sale of non-core assets, said it expected profit and cash flow improvements of at least 20 million pounds in its full-year 2020, with proceeds of 30 million pounds to 50 million pounds from the disposals.

Helped by demand in its construction and services businesses, Kier’s order book was worth about 10.2 billion pounds at the end of June, up from 8.9 billion pounds a year earlier, it said.

Kier, whose activities range from building power stations to outsourcing work for local councils, said it had seen “significant turbulence” in its markets during the year.

“There remain many moving parts and many strings to Kier’s bow and all are moving in the right direction … that construction did not move backwards is a good result in our view given the current challenges in the UK construction markets,” Jefferies analyst Anthony Codling said.

Britain’s economy has slowed in the two years since June 2016’s Brexit vote and construction activity slowed in August after reaching a two-year high the month before, as builders worked their way through projects delayed by bad weather earlier in the year, industry data from financial data company IHS Markit showed.

Kier said it acquired a greater share of the contract to build Britain’s High Speed 2 railway and the Highways England’s Smart Motorways programme after the high profile collapse of outsourcing firm Carillion <CLLN.L>.

Big government contractors like Kier have faced unflattering comparisons from investors with collapsed outsourcing firm Carillion.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Gopakumar Warrier)