- Operating margin expansion
- ‘Multi-year’ visibility
- Davies leaves Kier in good shape
Kier (KIE) was in demand with investors on 16 September with shares in the infrastructure and construction services outfit climbing 7% to 205.5p on better-than-expected annual results and the news trading is ‘slightly ahead’ of expectations in the new financial year-to-date.
The FTSE 250 firm also reported a 2% year-on-year order book increase to a record £11 billion.
This means Kier boasts enviable earnings visibility with 91% of expected full-year 2026 revenue secured and roughly 70% of 2027’s anticipated revenue already in the bag.
BOWING OUT ON A HIGH
Results for the year to June 2025 from the Manchester-based firm revealed a 6% uplift in adjusted pre-tax profits to £125.4 million on a 3% rise in revenue to £4.1 billion.
The forecast-beating performance allowed CEO Andrew Davies to bow out on a high; he is retiring on 31 October 2025 to be succeeded by Stuart Togwell.
Davies commented: ‘In the first year of our long-term sustainable growth plan the group delivered strongly, with profit performance, in particular, ahead of our initial expectations. Our adjusted operating profit margin of 3.9% has progressed well towards our target range of 4% to 4.5%, while we also grew our order book to a record £11 billion, providing considerable, multi-year revenue visibility.’
Davies added: ‘These achievements, together with our strong recurring cashflow and balance sheet discipline, enabled us to invest further in our property business; commence an initial £20 million share buyback programme; and significantly increase the level of dividends payable to shareholders.’
CONTRACT WINS & CASH RETURNS
Despite prevailing political and economic uncertainties, Kier stressed that its core businesses are ‘well placed to benefit from Government and regulated industry spending commitments in respect of UK infrastructure’.
The company is a strategic supplier to the UK Government and about 90% of its contracts are with the public sector and regulated companies.
Last year’s contract highlights included Kier’s first contracts on Southern Water’s AMP8 framework, working on clean and waste water schemes totalling £45 million, more than £100 million in prison projects under the Small Secure Houseblocks Alliance for the Ministry of Justice as well as four projects in education worth about £210 million.
Having reinstated the dividend during full-year 2024, Kier then launched a £20 million share buyback in January 2025.
Given the group’s ‘significant’ operational and financial progress allied to the board’s ongoing confidence in Kier’s performance, the full-year dividend was bumped up 38% to 7.2p.
FIRM FOUNDATIONS
Russ Mould, investment director at AJ Bell, said Kier’s results are ‘a decent parting gift’ from Andrew Davies.
‘He joined when the company was still reeling from a damaging period which encompassed a highly dilutive fundraising, accounting errors, major write-downs, substantial losses and a revolving door of bosses.
‘Slowly, but surely, Davies has rebuilt the foundations of the business, and he hands it over to his successor Stuart Togwell in much better shape than he found it.’
Mould added: ‘A record order book and a strong balance sheet are the most significant bits of evidence of Davies’ work, and it is notable the company is trading ahead of expectations for the current financial year. The construction sector in the UK remains uneven but the company has focused on growth areas like infrastructure, and this has paid off handsomely.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Steven Frazer) own shares in AJ Bell.
