In This Article:
Release Date: March 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Kier Group PLC (FRA:10I) reported a solid set of results with revenue growth leading to an operating profit of 67 million, maintaining a margin of 3.4%.
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The company achieved a net cash position of 58 million, significantly reducing average month-end net debt to 38 million.
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The order book increased by 2% to a record 11 billion, providing multi-year revenue visibility with 98% of FY25 revenue secured.
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An interim dividend of 2p per share was declared, a 20% increase from the prior period, reflecting confidence in the business.
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A 20 million share buyback program was launched, indicating a commitment to increasing shareholder returns.
Negative Points
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The infrastructure services segment faces delays in the start of works for control period 7 in the rail market and the Road Investment Strategy 3 in the highways market.
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The group anticipates a further 20 million exposure related to fire and cladding costs due to regulatory changes.
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Despite revenue growth, the construction segment's operating margin was impacted by increased overheads to support additional site starts.
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The property business is expected to be second-half weighted, indicating potential volatility in returns.
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Cost inflation remains a concern, potentially affecting project budgets and causing delays, although the company has managed to mitigate its impact so far.
Q & A Highlights
Q: In the infrastructure segment, what level of visibility do you have regarding the transition from AMP7 to AMP8, and is there a risk of a bump during this transition? Also, can you provide insights on CP7 delays and the highways regulatory period? A: Andrew Davies, CEO: The transition from AMP7 to AMP8 is about mobilization. We have positions on frameworks worth up to 15 billion with nine counterparties. Utility companies are accelerating their mobilization plans, and we are on track. Regarding CP7 and RIS3, there are delays as the Department of Transport works out its spending profiles, but we are not overly concerned. We have strong positions with national highways and anticipate that programs will come through once defined.
Q: Regarding the property segment, do you expect more completions in the second half, and what is your visibility on this? Also, when do you expect to reach the 225 million capital employed target, and would you consider increasing it if returns progress towards 15%? A: Simon Keston, CFO: We have great visibility for the second half of the property business and are not concerned. As we approach the 225 million target, we will evaluate whether to enhance earnings or return value to shareholders, depending on the best opportunity.