Citing a mix of cost saving measures, long-term framework agreements and the sale of Kier Living, the Manchester-based construction firm said its results for the fiscal year ending 30 June will be moderately ahead of board expectations.
The group expects to deliver an adjusted operating profit margin of approximately 3% for the fiscal year, according to a full-year trading update published to the London Stock Exchange on 13 July. Kier’s full-year results will be published on 16 September.
The group highlighted several new awards in its trading update, including the £50m early works contract for HS2 Phase 2a and a £190m maintenance and response contract from Highways England for the strategic road network in parts of the South.
The £110m sale of its residential arm Kier Living to Foster BidCo and a successful capital raise netted the company approximately £350m in gross proceeds. Kier said that those decisions, alongside the group’s extension of a key loan facility to 31 January 2025, would enable it to have “the financial and operational flexibility to continue to pursue its strategic objectives within its chosen markets”.
Cash conversion of operating profit is expected to be around 90% for 2021.
Kier added that it estimates its balance sheet for 2021 will show a “sustainable net cash position with capacity to invest”. The company expects to generate positive adjusted operating cash flow for the year, and said its average month-end net debt for the 2021 year remained similar to the 2020 year figures.
“With cash generation continuing to be strong, we anticipate reporting a net debt/cash position at the year end, better than the board’s previous expectations,” the trading update said.
Andrew Davies, chief executive officer of Kier Group, said: “The group’s proven track record of delivery and focus on selected markets, coupled with its strong order book and strengthened balance sheet, gives the board confidence in our strategy and the continued success of the group.”
Kier’s share price was down 1p on the morning of the announcement.