- Bumper £11 billion order book
- 80% of FY26 revenue in bag
- Margin target upgraded
Shares in Kier (KIE) climbed 3.5% to a five-year high of 174p after the infrastructure and construction services outfit reported solid trading for the four months to 30 April 2025 and a slight uptick in an already-bulging order book that gives the company good multi-year visibility.
In a statement ahead of today’s (3 June) Capital Markets Event, the FTSE 250 infrastructure specialist upgraded its three-to-five year adjusted operating margin target from 3.5%-plus to the 4%-to-4.5% range, which also went down well with investors.
UNIQUE OPERATING MODEL
‘Bidding discipline and risk management embedded across the business has driven a higher quality order book, which combined with the recapitalisation of our property business has led us to increase our operating profit margin target to 4% to 4.5% in three to five years,’ said Manchester-headquartered Kier.
The company also emphasised that its ‘unique operating model’ enables Kier to drive ‘above market growth through the cycle and its sector-leading margins’.
KIER HARD WORK
Led by CEO Andrew Davies, the UK infrastructure services and construction outfit said it continued to ‘trade well’ and in line with the board’s expectations in the period to 30 April 2025, as of which the order book stood at roughly £11 billion.
That was consistent with the half-year position and represented a 2% increase on the £10.8 billion order book reported at the company’s June 2024 year end.
Among the key beneficiaries of UK Government infrastructure spending commitments, Kier has already secured circa 80% of its full-year 2026 turnover, ‘providing a high degree of visibility’.
BRIGHT PICTURE
Recent contract awards range from a five-year renewal of the Anglian Water IOS Alliance worth up to £400 million for Kier’s Natural Resources, Nuclear & Networks arm, a one-year extension by Shropshire County Council for the maintenance of local highways and the receipt of planning permission for a £200 million redevelopment of Bishop’s Stortford station in a joint venture with Network Rail.
But the picture is actually brighter for the business, since long-term framework positions are excluded from the order book and represent an ‘additional opportunity’.
This helps explain why Kier is confident in its future prospects and launched a £20 million share buyback at the start of 2025, supported by its strong cash generation and net cash balance sheet.
